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IMF Downgrades 2021 GDP Forecast on ‘Vaccine Divide,’ and Inflationary Pressures

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The IMF projects global economic growth in 2021 to drop slightly below its July forecast of 6%, pointing to risks associated with debt, inflation, and divergent economic trends.

Source: Reuters

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IMF chief Kristalina Georgieva stated that the global economy was rebounding, but the pandemic continued to hamper recovery, with the main challenge posed by the “Great Vaccination Divide.”

In a virtual speech at Bocconi University in Italy, Georgieva stated that the upcoming week’s updated World Economic Outlook would project that advanced economies would bounce back to pre-pandemic levels by 2020, but emerging and developing nations will need “many more years” to bounce back.

Georgieva further stated that the global recovery remains ‘hobbled’ by the pandemic and its impact. The US and China remained critical engines of growth, and Italy and Europe were showing positive momentum.

Inflation pressures, a major risk factor, was expected to subside in most economies in 2020 but would continue to slow down emerging and developing economies.

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