International Monetary Fund maintains S. Korea’s 2021 economic growth outlook at 3

Remigio Civitarese
Aprile 6, 2021

Similarly, the multilateral institution upwardly revised the growth outlook for South Africa, from 2.8% to 3.1%.

The IMF says there is likely to be increasing income inequality due to the pandemic.

"Even with high uncertainty about the path of the pandemic, a way out of this health and economic crisis is increasingly visible", Gita Gopinath, the IMF's chief economist, said in a blog post accompanying the latest World Economic Outlook report.

In 2022, the IMF predicts, worldwide economic growth will decelerate to a still strong 4.4 per cent, up from its January forecast of 4.2 per cent.

The paper, published Monday, argued for an extension of the Group of 20's debt service moratorium through year-end, citing the continued high liquidity needs of developing countries and their deteriorating debt sustainability outlooks.

Earlier forecasts saw a contraction of over 7% for this country previous year with the hope that the economy can now bounce back. The Euro Area is projected to grow at 4.4% and 3.8% over these time periods; China, at 8.4% and 5.6%. Last month, it forecast Asia's fourth-largest economy to grow 3.6 percent this year, up from its estimate in January of 3.1 percent. The SARB started keeping records in 1912.

The Washington-based fund's World Economic Outlook also boosted its forecast for the global economy, anticipating vaccine rollouts over the summer that will strengthen economic recovery through the second half of the year. "In the current forecast we have already taken a fairly conservative view on the sequential growth of the Indian economy for this year".

A retroactive look from the International Monetary Fund estimated that fiscal measures from governments around the world contributed about 6% to global growth in 2020, helping to soften a global shock that still contracted output by 3.3% in 2020.

Because a financial crisis was averted, medium-term losses are expected to be smaller than after the 2008 global financial crisis, at around 3%.

The report also said that the recovery in emerging markets is expected to be slower than in advanced economies - with significant divergence across countries - driven by the less supportive stance of central banks over the past few months, in response to higher commodity prices; higher domestic inflation; the improved economic outlook and higher United States rates.

The sub-Saharan Africa region - which includes Ghana, Kenya, South Africa and Nigeria - continues to feel the pandemic's impacts. "For many frontier market economies, market access remains impaired", said the report.

The contraction could have been three times as large if not for extraordinary policy support.

The World Bank estimates that Africa alone would need about US$12 billion for Covid-19 vaccines to attain sufficient levels of inoculations to interrupt virus transmission, according to a new paper by the bank and the International Monetary Fund.

There have also been "learning losses", particularly in low-income and developing countries which had to introduce school closures. Policymakers should also be prepared to "flexibly adjust" policy support.

"... Countries will need to tailor their policy responses to the stage of the pandemic, the strength of the recovery, and structural characteristics of the economy", the report read.

Gopinath said faster progress with vaccinations can uplift the growth forecast of both developed and developing countries, while a more prolonged pandemic with virus variants that evade vaccines can lead to a sharp downgrade.

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