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Covid variants are risky

Covid variants are risky

Gita Gopinath, chief economist at the International Monetary Fund.

Andrew Caballero-Reynolds | Agence France-Presse | Getty Images

LONDON – The International Monetary Fund has become more optimistic about the global economy, as coronavirus vaccines are being administered all over the world. However, she is concerned about the risks the new Covid variants pose to the post-pandemic recovery.

According to the latest World Economic Outlook, published on Tuesday, the corporation now expects the global economy to grow 5.5% this year – 0.3 percentage points more than the October forecast. It expects global GDP (Gross Domestic Product) growth of 4.2% in 2022.

“Much now depends on the outcome of this race between the mutant virus and vaccines to end the epidemic, and on the ability of policies to provide effective support for that to happen,” Gita Gopinath, chief economist at the International Monetary Fund, said in a blog post.

“There is still a tremendous amount of uncertainty and the outlook varies greatly across countries.”

The world has seen a spike in the number of Covid-19 infections and deaths over the past few months, such as New types of coronavirus spread quickly. It has been described as being more contagious and potentially more lethal than the original strain.

As a result, many countries escalated their social restrictions, causing further economic suffering.

In fact, the International Monetary Fund has cut its forecast for the euro zone’s GDP this year by one percentage point. The 19-nation region, which has been hard hit by the epidemic, is now expected to grow 4.2% this year.

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Germany, France, Italy and Spain – the four largest economies in the eurozone – also saw a decline in growth forecasts for 2021.

Economic activity slowed in the region In the last quarter of 2020 and this is expected to continue until the first part of 2021. The International Monetary Fund does not expect the eurozone economy to return to the levels of the end of 2019 before the end of 2022.

US growth adjusted upwards

On the other hand, the United States is set to grow more than expected this year, according to the International Monetary Fund.

The IMF revised its 2 percentage point GDP forecast on the back of strong momentum in the second part of 2020 and additional financial support. The GDP is now seen at 5.1% this year.

The The US Congress has approved nearly $ 900 billion in stimulus package In December, President Joe Biden suggested that more relief packages could come soon.

And the International Monetary Fund said, given emerging markets, China is set to grow above 8% this year.

“China has returned to the expected pre-epidemic level in the fourth quarter of 2020, ahead of all major economies. The United States is expected to surpass pre-Covid levels this year, well ahead of the eurozone,” Gopinath said on Tuesday. .

The International Monetary Fund has emphasized that governments will need to continue to support their economies through fiscal stimulus in order to boost economic recovery.

“Policy measures must ensure effective support so that recovery is resolute, with an emphasis on pushing fundamental imperatives to increase potential production, ensuring participatory growth that benefits everyone, and accelerating the transition to a lower carbon dependency,” Gopinath added.