Trade Expected to Grow by 9.7 Percent
July 29, 2021–The global economy is returning to strong growth this year, according to the International Monetary Fund. Trade, travel and economic activity are resuming following the global pandemic. In the United States, growth is projected at 7 percent. The Euro area is expected to have a 4.6 percent increase. And emerging markets and developing economies are rebounding from the recession with 6.3 percent growth this year.
Prices & Inflation
Consumer prices are increasing by 2.4 percent on a global basis. Commodity prices are rising, with oil jumping by 56.6 percent.
Trade
Trade is expected to pick up by nearly 10 percent this year and then to 7 percent in 2022. According to the IMF, “The merchandise trade recovery is set to broaden after being initially concentrated in pandemic-related purchases, consumer durables, and medical equipment. Services trade is expected to recover more slowly, consistent with subdued cross-border travel until virus transmission declines to low levels everywhere.”
Pandemic Prowess
Meanwhile, a second wave of Covid-19 is hitting some countries hard, particularly in Asia. That is putting a damper on their economic recoveries. The IMF downgraded its forecasts for the ASEAN-5 group (Indonesia, Malaysia, Philippines, Thailand, and Vietnam) and India slightly.
Vaccine Rollout
Earlier this year, the IMF warned about diverging paths between rich and poor countries. This Summer, the organization is emphasizing it all depends on countries’ abilities to control the Covid-19 virus. Low-income developing countries face slower vaccine rollouts. Meanwhile, the number of people facing extreme poverty has grown by 80 million.
IMF Wants to Put $50 Billion to Vaccine Distribution
The WEO forecast says vaccine equitably is a central priority. Multilateral action can reduce the spread between economies. IMF staff proposed $50 billion be directed towards pandemic recovery. The IMF staff called on national-level policies to assist with multilateral actions.
The IMF report, “World Economic Outlook Update”, is available for public view.
Additional reporting by Patti Mohr.
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