The International Monetary Fund (IMF) is projecting improvements to global economy after President Joe Biden signed his $1.9-trillion stimulus package into law, with expectations it will boost a vaccine-led recovery worldwide.
Kristalina Georgieva, the IMF’s managing director made the comments in a speech Tuesday as the IMF prepares to release its latest World Economic Outlook.
“In January we projected global growth at 5.5 percent in 2021,” Georgieva said. “We now expect a further acceleration: partly because of additional policy support – including the new fiscal package in the United States – and partly because of the expected vaccine-powered recovery in many advanced economies later this year.”
She said the continued recovery has been a combination of the medical community saving lives, essential workers providing support to keep the economy moving and the scientists rapidly coming up with a vaccine. Georgieva said countries took considerable financial risk pumping trillions into the economy.
“Without these synchronized measures, the global contraction last year would have been at least three times worse,” Georgieva said. “Just think about it – this could have been another Great Depression. Also, we did not have another global financial crisis – not just because of the extraordinary measures, but also because countries had worked together over the past decade to make banking systems more resilient.”
She said her comments were not to suggest there are still countries and regions struggling because of the pandemic. She said the challenges and unknowns about the coronavirus and its variants still leave a level of high uncertainty.
For emerging and developing countries, excluding China, the [economic] loss will be much worse – at 20 percent, cutting one-fifth of what is already a much smaller per capita income than in richer countries,” Georgieva said. “This loss of income means millions of people will face destitution, homelessness, and hunger.”
She urged the world powers to deal with human capital and other long-term “scars” from the pandemic at a more accelerated level and risk allowing the challenges to linger.