Economic stimulus approved in the United States and Japan at the end of last year will help to power a recovery in their economies in the second half of 2021, IMF chief economist Gita Gopinath said on Wednesday.
Gopinath told Yahoo Finance in a live interview that the US and Japanese rebounds may prompt upgrades of economic forecasts in some parts of the world. But she said the recovery in some developing countries could be delayed until 2022 by limited availability of coronavirus vaccines.
She repeated earlier remarks that the global economy is starting 2021 in a stronger position than anticipated last year due to a stronger-than-forecast performance in the third and fourth quarters. Gopinath, however, added that the outlook was clouded by a race between the surging COVID-19 pandemic and the worldwide vaccination campaign.
But the combination of a stronger starting point and new stimulus “should power recovery in the second half,” Gopinath told Yahoo Finance. “Based on the 2020 better-than-expected numbers, we should see an upgrade in some parts of the world.”
That assumes that vaccines will be widely distributed by mid-year in those countries, she said, adding that those with limited access to vaccines will recover more slowly, including many developing economies.
The International Monetary Fund is expected to revise its World Economic Outlook forecasts on Jan 26. In October, it forecast a 4.4 per cent global GDP contraction for 2020, followed by a rebound to growth of 5.2 per cent for 2021.