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The International Monetary Fund says the pandemic will not cause sustained damage to advanced economies



According to the International Monetary Fund, due to the relatively rapid introduction of vaccines and their willingness to substantially increase public spending and borrowing, most advanced economies will be freed from the coronavirus crisis without causing lasting damage.

The fund said that possible success in managing the economic impact of the pandemic will not be replicated in emerging economies, which highlights the divergence in economic fortunes.

It said on Tuesday that despite the different fates, the global economic outlook has improved significantly since the fund’s previous forecast since the beginning of this year, raising expectations for almost all countries.

The International Monetary Fund predicts that the global economy will achieve two-year rapid growth of 6% and 4.4% in 2021

and 2022. It also lowered the estimated scale of global output shrinkage caused by the pandemic last year.

The fund’s projections indicate that the economic legacy of this pandemic will be completely different from the 2008-09 financial crisis, which left countries still plagued by weak growth 10 years later.

The bar chart of medium-term output loss (% of GDP) shows that advanced economies will rise from Covid-19, and their losses will be less than the 2008-09 financial crisis

According to the forecast of the International Monetary Fund, by 2024, the output of advanced economies will be about 1% less than the growth path before the pandemic. On the contrary, after the 2008-09 recession, their gap exceeded 10%.

Overall, the economic impact of a pandemic is “far less than the impact of a pandemic.” [2008-09] Gita Gopinath, Chief Economist of the International Monetary Fund, said, [economic] Scar and [in] United States [there is] There are actually no scars.”

The IMF raised its forecast for US economic growth in 2021 by 1.3 percentage points. Canada’s forecast rose by 1.4 percentage points, Italy by 1.2 percentage points, and the United Kingdom by 0.8 percentage points.

The fund is particularly optimistic about the prospects for a rapid recovery in the United States without inflationary pressures. Gopinas said: “The United States is indeed the only major economic power. [economic output] It is expected that by 2022 it will exceed what it would have been without such a pandemic. “

However, the International Monetary Fund pointed out that the economic and social pain of this crisis has hit certain countries and people within them, making it much harder than others. Parts of Europe are suffering from another wave of coronavirus and it may take longer to recover. However, the International Monetary Fund is optimistic that the European Union will catch up with other developed economies such as the United States in just a few years.

The IMF predicts that by 2024, even many backward European economies will almost return to their pre-pandemic growth path.

This is mainly because developed countries and their companies proved to be much more resistant to lock-in than the fund had previously expected.

The bar graph of 2021 GDP growth as of the forecast date (%) shows that the IMF upwardly revised the global economic outlook

In contrast, the International Monetary Fund expects this crisis to cause a continuing drag on emerging economies. With the exception of China, economic output by 2024 is expected to be nearly lower than the IMF’s expectations before the pandemic. 8%.

The International Monetary Fund said the countries most likely to fall into a slow recovery are emerging economies that rarely get the Covid-19 vaccine, countries with weak public finances, and countries that rely heavily on tourism.

In the short term, the shock to emerging economies will be the disruption of schooling during the pandemic, which is described by the fund as causing “serious losses” to education in poorer countries because of their limited ability to provide education online.

Gopinas said that there is little reason to worry immediately that the unprecedented fiscal stimulus on both sides of the Atlantic will cause inflation to rise, because global forces may curb price increases, and there is no sign that the central bank or the central bank will take action. The government will lose control.

But it highlights the risk that if inflationary pressures do rise rapidly, the United States may need to lead the world to tighten monetary policy quickly. By driving capital to flow back to advanced economies, this could deal a particularly severe blow to emerging markets.

Gopinas said, however, so far, there is no sign that the 1.9tn stimulus plan of US President Joe Biden has disrupted the stability of the international market, which is an encouraging sign.

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