United Kingdom growth tipped to outstrip USA and Europe

Paola Ditto
Aprile 6, 2021

Japan is expected to register 3.3 per cent growth this year and 2.5 per cent next year.

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.

Data published by Statistics South Africa in March showed that South Africa's economy contracted by 7% previous year.

"The upgrades in global growth for 2021 and 2022 are mainly due to upgrades for advanced economies, particularly to a sizeable upgrade for the United States (1.3 percentage points) that is expected to grow at 6.4% this year". In fact, India is the only country among major world economies that is projected to grow at a double-digit rate during FY22.

The IMF also upgraded 2021 forecasts for a number of other advanced nations, including Canada (5.0% GDP growth expected), Italy (4.2%), and the United Kingdom (5.3%).

Last week in its Quarterly Bulletin for March 2021, the SARB said its records show that in 2020, the SA economy suffered its second-largest contraction in 100 years.

"Thanks to unprecedented policy response, the Covid-19 recession is likely to leave smaller scars than the 2008 global financial crisis", it said.

Talking about the global outlook, the report projected global economy to grow at 6 per cent in 2021 as against a contraction of 3.3 per cent in 2020. "However, emerging market economies and low-income developing countries have been hit harder and are expected to suffer more significant medium-term losses".

The sub-Saharan Africa region - which includes Ghana, Kenya, South Africa and Nigeria - continues to feel the pandemic's impacts.

While China returned to its pre-Covid-19 GDP levels in 2020, the USA is expected to surpass its pre-Covid-19 GDP levels in 2021.

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.

"Such losses are reversing gains in poverty reduction, with an additional 95 million people expected to have entered the ranks of the extreme poor in 2020 compared with pre-pandemic projections", Ms. Gopinath wrote. "Unequal setbacks to schooling could further amplify income inequality".

A high degree of uncertainty surrounds IMF's projections, she said, adding that faster progress with vaccinations can uplift the forecast, while a more prolonged pandemic with virus variants that evade vaccines can lead to a sharp downgrade. Policymakers should also be prepared to "flexibly adjust" policy support. With multi-speed recoveries, a tailored approach is necessary, with policies well-calibrated to the stage of the pandemic, the strength of the economic recovery, and the structural characteristics of individual countries, she said.

"While the pandemic continues, policies should first focus on escaping the crisis, prioritising health care spending, providing well-targeted fiscal support, and maintaining accommodative monetary policy while monitoring financial stability risks". In a blog post, Gopinath said the pandemic is yet to be defeated and virus cases are accelerating in many countries.

The Washington-based global financial institution, in its annual World Economic Outlook ahead of the annual Spring meeting with the World Bank, said the Indian economy is expected to grow by 6.9 per cent in 2022.

"The global community also needs to work together to ensure that financially constrained economies have adequate access to worldwide liquidity so that they can continue needed health care, other social, and infrastructure spending required for development and convergence to higher levels of income per capita", the IMF report said. "While some countries will get to widespread vaccinations by this summer, most, especially low-income countries will likely have to wait until end-2022".

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