With vaccines against Covid-19 expected to be widely available by the summer, the International Monetary Fund (IMF) is anticipating a pick-up in global economic activity later this year.
Its latest growth forecast projects that the global economy will grow by 5.5% in 2021 and 4.2% in 2022.
This year’s forecast has been lifted by 0.3 percentage points, reflecting expectations of a “vaccine-powered” pick-up in global economic activity and additional policy support in certain large economies including the United States and Japan.
The projected recovery in growth follows a “severe collapse” triggered by the spread of coronavirus in 2020. The global growth contraction for 2020 is estimated at -3.5%.
Activity levels in the US and Japan are expected to return to end-2019 levels in the second half of 2021, while in the UK and the euro area activity is expected to remain below end-2019 levels into 2022.
“The wide divergence reflects to an important extent differences across countries in behavioural and public health responses to infections, flexibility and adaptability of economic activity to low mobility, pre-existing trends, and structural rigidities entering the crisis,” the IMF explained.
The UK economy is expected to grow by 4.5% this year, followed by growth of 5.0% in 2022. The UK’s estimated 10% contraction in 2020 was the largest of the G7 group of advanced economies.