Vaccination gives hope for stronger global growth in 2021

A cumulative loss of 22 trillion dollars for the world GDP: the pandemic will leave traces for a long time on the world economy even if the accelerated vaccination gives hope for stronger growth than expected this year, warned Tuesday the International Monetary Fund .

• Read also: All developments in the COVID-19 pandemic

This gigantic number was calculated from estimates made before the pandemic for years to come, Gita Gopinath, chief economist, told a press conference to present the latest global forecast. This loss is “substantial”, she commented.

The Fund now expects a rebound of 5.5% of global GDP from 5.2% three months earlier, on the back of accelerated immunization and massive government aid plans.

This growth will follow “a dramatic collapse,” noted Ms. Gopinath, while raising “extraordinary uncertainty” surrounding these new forecasts.

Growth could be stronger or weaker: “It will depend on the outcome of the race between the mutating virus and vaccines, and to what extent political support continues,” she summarized.

The baseline scenario is based on “wide availability” of vaccines in advanced economies and some emerging countries in the summer of 2021 as well as in most countries by the second half of 2022, i.e. an accelerated schedule compared to expectations. of October.

However, this last estimate covers disparate realities from one country to another.

The United States, the world’s leading economic power, should thus record a growth in its Gross Domestic Product of 5.1% (+2 points) boosted by the latest economic support plan of 900 billion dollars adopted at the end of December.

It would then be the strongest annual growth since 1984.

That’s not to mention the potential impact of the massive $ 1.9 trillion bailout unveiled in early January by new Democratic President Joe Biden, which is due to be negotiated in Congress soon.

This plan could bring 5% additional growth over three years (2021, 2022 and 2023), according to a very preliminary estimate from the IMF.

Eurozone struggling

China will register a growth of 8.1%, barely less than the 8.2% projected three months ago. But the world’s second-largest economic power has returned to pre-pandemic levels since the last quarter of 2020.

In the euro zone, the resurgence of the COVID-19 pandemic and the resulting containment measures have, on the contrary, weakened activity again. And the return to the economic level at the end of 2019 is not expected before 2022.

The Washington institution is now only expecting a GDP of 4.2% (-1 point).

Germany is expected to post growth of 3.5% (-0.7 point), France + 5.5% (-0.5 point), Italy + 3% (-2.2 points) and ‘Spain + 5.9% (-1.3 point).

And still on the old continent, the United Kingdom, hit by the variant of the new coronavirus, sees its forecast also lowered, to 4.5% (-1.4 point).

The United States and Japan are expected to return to their pre-crisis levels in the second half of 2021.

In the face of uncertainty, now is not the time to withdraw government aid prematurely, insisted Gita Gopinath.

This warning comes as reluctance appears among Republican and Democratic ranks in the United States over the bailout proposed by Joe Biden. The fears are based in particular on the expected explosion of the budget deficit if this gigantic plan is adopted.

Among the elements to hope for even better growth than expected this year: the manufacture of vaccines including those under development in emerging economies as well as their distribution and the effectiveness of therapies.

This would mean a faster end to the pandemic, boosting business and household confidence. An assumption that would lead to a stronger recovery in consumption, investment and employment.

Social unrest

Conversely, growth could turn out to be less than the expected 5.5% if the outbreak of viruses, including from new variants, proves more difficult to contain.

Hopes for a relatively quick exit from the pandemic would then be dashed, weakening confidence.

The Washington institution also contemplates potential social unrest due to increased inequality and unequal access to vaccines and therapies.

For 2022, the Fund left its forecast unchanged at 4.2%.

On the other hand, the contraction in GDP recorded last year was ultimately smaller, although still historic: -3.5%, far from the 5.2% estimated in June 2020.

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