HomeIMF Upgrades Economic Growth in Advanced Economies

IMF Upgrades Economic Growth in Advanced Economies

The International Monetary Fund (IMF) upgraded its growth projections for developed economies. It now sees 5.6% growth in 2021 and 4.4% in 2022, up by 0.5%, respectively 0.8%.

One of the most important economic reports on the global economy is the World Economic Outlook. Compiled by the IMF, it is a comprehensive report covering the global economy, with a close look at developed, emerging, and developing markets.

The July 2021 release includes an upgrade of growth projections in advanced economies. As such, the IMF now sees the economic growth in the developed world to reach 5.6% in 2021 and 4.4% in 2022, up by 0.5%, respectively 0.8%.

Not All Regions Are Expected to Perform the Same

A few things stand out from the IMF report. First, the United States economy is forecast to grow by 7% this year and 4.9% in the next one. It is the largest growth in the developed economies, with only the United Kingdom’s economy projected to grow at similar levels.

Because the United States is the largest economy in the world, the strong growth there will have spillover effects in other parts of the world. The main US trade partners will benefit as well from the strong expected growth.

Second, emerging markets and developing economies were downgraded. Their potential growth was lowered by -0.4% in 2021, on the back of pandemic risks due to weak vaccination campaigns.

The report also points to the risks ahead. New variants of the virus are concerning, as well as economic aftershocks generated by the unprecedented convulsion in the global economy. Supply-demand mismatches and the spikes in annual inflation are also mentioned as possible risk factors that might influence the growth projections.

However, amid all these challenges, the report acknowledges that the financial conditions around the globe have remained generally supportive. Thus, the global outlook remains generally positive in the period ahead.

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