The International Monetary Fund or IMF has downgraded the forecasts for the United Kingdom’s recovery in 2021. Thanks to the accelerating vaccine rollouts, the global economy’s expansion are expected to quicken this year.
The IMF illustrated the severe impact of the coronavirus pandemic on the UK economy and stated that in its latest forecast, the national income of the United Kingdom or the GDP would expand by 4.5% in 2021, which is 1.4% points down from the 5.9% growth forecast that was made in October 2020.
The new prediction follows an estimated contraction in the UK GDP of 10% last year, recorded as the biggest fall of any G7 country. The global economy, which got help due to the improved outlooks in Japan and the United States, will recover from a 3.5% fall in GDP in 2020 with a growth of 5.5% in 2021, which is an increase of 0.3% points compared with the forecast done in October 2020.
A Change in the Forecast
Aside from the UK economy, the US economy is forecast to grow by 5.1% in 2021. Japan’s economy is forecast to grow by 3.1% GDP in the eurozone is forecast to grow by 4.2% in 2021.
The Washington DC-based IMF stated that the upgrade in global growth reflected an increase in government spending to offset the worst effects of the coronavirus pandemic and vaccination rollout programs scheduled in developed nations.
The report stated that around 90 million people were likely to fall below the extreme poverty threshold from 2020 to 2021. The IMF managing director, Kristalina Georgieva, has urged the governments to expand healthcare provision and welfare policies to protect the vulnerable groups and limit an expected growing divide between the rich people and those who are suffering in poverty during the coronavirus pandemic.
Ahead of the World Economic Forum’s yearly summit, Georgieva said governments must not let the pandemic affect efforts to tackle climate change and poverty.
Georgieva said, “Building resilience can be good for nature and ecosystems; it can be good for economic growth; at a time when economies have lost low-skilled jobs, it boosts job creation; and the fourth win is that it can bring health benefits [such as reduced air pollution].”
The IMF also said that there were risks posed because of the new variants of COVID-19 that could be difficult to treat and vaccinate against, but other dilemmas had been diminished because of the possible no-deal Brexit.
The Biden administration is ready to release an extra $1.9 trillion or £1.4 billion into the US economy, and Chinese economic growth likely to increase to 8.6% in 2021, much of it after a massive boost from an investment that is state-sponsored, the prospect for higher growth than what was predicted in October 2021 had improved.
The UK’s fast-moving vaccination program is not predicted to give an extra boost to UK growth, not until 2022, at least when its growth rate increased by 1.8% points to 5%.
Despite these predictions, IMF dispelled any concerns about inflation over the next 12 months. IMF stated that the average prices would not increase by more than 1.5% until 2022.