The International Monetary Fund forecast 6% global economic growth in 2021 in its latest World Economic Outlook report, up from the 5.5% projected in January. The world GDP will see significant improvement thanks to high vaccination rates and more focused government spending, before slowing down to 4.4% growth in 2022.
- As a more advanced economy, the U.S. is expected to see a 6.4% growth in 2021 and 3.5% in 2022. The current stimulus programs and proposed infrastructure investment plan have impacted the forecasts, adding 3.3% since October 2020 and 1.3% since January 2021.
- GDP in the Euro area (Germany, France, Italy Spain) will grow 4.4% in 2021 and 3.8% in 2022, compared to an average 4.7% slowdown among its established economies during 2020.
- China and India's economies will grow 8.5% and 12.5%, respectively, this year.
- Fiscal support, public investments, and virus containment, such as vaccinations, are named critical factors for future recovery.
Global Activity Indicators
(Three-month moving average, YoY % change, deviations from 50 for PMI)*
- The U.S. unemployment rate is expected to decline to 5.8% in 2021 and 4.1% next year.
- According to the report, although strong financial markets are critical for the recovery, the increasing gap between market valuations (see graph 4 below) and the real pace of economic recovery creates financial stability risks.
Monetary and Financial Market Conditions
*All graphs were taken from the IMF World Economic Outlook Report — April 2021.