Projections for Global Growth and Income
March 3, 2021 — If vaccine distribution throughout the world is effective in fighting off the COVID-19 virus and its related variants, the global economy is likely to rebound with strength. The International Monetary Fund projects global growth to reach 5.5 percent by the year’s end.
Not surprisingly, however, as businesses resume activity, economies are likely to recover at different rates. In January, the IMF projected that the recovery would “vary significantly” based on countries’ access to medical interventions of the virus, policy supports for the economy, exposure to other countries, and their pre-crisis structural issues.
Economic Projections
According to the fund’s data mapper for 2021, regions like the Middle East, Sub-Sahara Africa and Latin America will see economic growth between 3 to 4 percent. In contrast, emerging and developing Asian economies could see economies boom by 8 percent. The Euro area, meanwhile, could see a 5 percent rise in GDP.
‘Uncertainties Remain High’
Meanwhile, IMF Managing Director Kristalina Georgieva provided a word of caution to optimists. Much still depends on the reach of the virus. “Uncertainties remain very high, as vaccinations still have a long way to go against new waves and variants of the virus,” she said on Friday.
‘Dangerous’ Income Inequality
Looking deeper, analysts warn that even as most economies enter recovery territory, incomes may diverge significantly.
The IMF’s Georgieva told participants at a G20 virtual meeting she sees income gaps between and within economies continuing to rise.
“We see dangerous divergence between and within economies,” Georgieva said. She said the IMF projects cumulative per capita income losses as high as 22 percent by 2022 in emerging and developing countries, excluding China. That compares with a 13 percent loss in advanced economies. “Within countries, the young, the low-skilled, and women have been disproportionately affected by job losses.”
That analysis supports recent reporting by Leyla Boulton of the Financial Times. In a video report sponsored by UBS, Boulton asserted that “global inequality is worsening, with no obvious remedy in sight,” as the world’s five wealthiest individuals saw their collective fortunes rise by more than $250 billion in 2020.
That trend is also found in a recent story in the GER, Central America Leaders Advance Regional Development Plans As Area Slides Into Poverty.
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