The IMF raised its forecast for China’s economic growth this year to 8.4%

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On April 6, the International Monetary Fund (IMF) released its World Economic Outlook report, which predicted that the global economy would grow by 6% in 2021, up 0.5 percentage points from its forecast in January. Of that, China’s economy is forecast to grow 8.4 per cent, up 0.3 percentage points from its January forecast. However, the report also said that the outlook for global economic growth remains highly uncertain and will depend mainly on the development of the epidemic and the effectiveness of policy actions.

Gita Gopinas, the IMF’s economic adviser and research director, says the path out of the health and economic crisis is becoming clearer. Working and lifestyle adjustments during the epidemic have allowed the global economy to continue to function effectively in an environment of reduced overall mobility, with economic recoveries generally stronger than expected in all regions. Building on last year’s unprecedented fiscal response and continued loose monetary policy, additional fiscal support has been provided by some economies, notably the US, further boosting the economic outlook.

However, Gita Gopinas also points out that the forecast is highly uncertain, with a variety of potential upside and downside risks. Much of the economic outlook still depends on the battle between the virus and the vaccine. The economic outlook would improve if more progress was made in vaccines, but could deteriorate sharply if new drug-resistant strains emerged. As the battle between the virus and the vaccine unfolds, countries must further refine their policies to ensure that they remain able to support economic activity during this period of uncertainty.

Gita Gopinas suggests that countries need to adopt a national approach, taking into account the stage of the epidemic, the strength of the economic recovery, and the social and economic conditions in their own countries when formulating policies. For example, once the health crisis subsides, policy priorities can shift to building more resilient, inclusive and environmentally friendly economies to promote recovery and increase potential output. Priorities include investing in green infrastructure to mitigate climate change; Strengthening social assistance and social insurance to curb rising inequality; Adopt incentive measures to increase productivity and adapt to the requirements of the digital economy; And tackling the debt overhang.

The report also highlights that diverging paths to recovery are likely to lead to a significantly wider gap in living standards between developing countries and the rest of the world than was expected before the outbreak. Relative to pre-epidemic projections, the cumulative loss of per capita income in emerging market and developing economies, excluding China, in 2020-2022 is equivalent to 20% of 2019 per capita GDP, while the loss in developed economies is relatively small at 11%. This will reverse progress in poverty reduction, with extreme poverty expected to rise by 95 million people in 2020, while malnutrition will rise by 80 million. China and the United States are increasingly becoming the engines of the global economic recovery, IMF Managing Director Georggieva said at the opening of the IMF/World Bank Spring Meetings Online.


Post time: Apr-07-2021