The International Monetary Fund (IMF) has become more upbeat about the global economy, as COVID-19 vaccinations are administered across the world. It is, however, worried about the risk new Covid variants pose to the post-pandemic recovery.

According to the latest World Economic Outlook, published Tuesday, the institution now expects the global economy to grow 5.5% this year, i.e a 0.3 percentage point increase from October’s forecasts. It sees global GDP (gross domestic product) expanding by 4.2% in 2022.

“In our latest World Economic Outlook forecast, we project global growth for 2021 at 5.5 per cent, 0.3 percentage point higher than our October forecast, moderating to 4.2 per cent in 2022, said Gita Gopinath, Chief Economist of the IMF.

The global economy contracted by an estimated 3.5 per cent in 2020 amidst the unprecedented health crisis.

The 2021 forecast is revised up by 0.3 percentage point relative to the previous forecast (5.2 per cent) in October last year, reflecting expectations of a vaccine-powered strengthening of business activities later in the year and additional policy support in a few large economies, the IMF said.

According to Gopinath, the upgrade for 2021 reflects the positive effects of the onset of vaccinations in some countries, additional policy support at the end of 2020 in economies such as the United States and Japan and an expected increase in contact intensive activities as the health crisis wanes.

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