Current Affairs 2021: Highlights of World Economic Outlook Report October 2021
By Dinesh U
International Monetary Fund released the World Economic Outlook report in October 2021. Read here the highlights and some important facts of IMF’s World Economic Outlook 2021.
The International Monetary Fund (IMF) releases the world economic outlook report bi-annually (usually published in the months of April and October with updates in January/June). The IMF published the recent edition of the World Economic Outlook in October 2021. The earlier report was released in April this year. The International Monetary Fund’s Outlook 2021 has projected the global economy to grow 5.9 per cent (0.1 percentage lower than IMF’s July estimates) in 2021 and 4.9 per cent in 2022. Concern about the emergence of aggressive SARS-COV2 (Corona variant) before widespread vaccination is reached.
The world economic outlook is a report by the International Monetary Fund that analyzes key parts of the IMF’s surveillance of economic development and policies in its member countries. The report presents the IMF’s analysis and projections of global economic developments and classifies their analysis by region and stage of economic development.IMF start the report preparation in January/June and present the report during April/ October /September each year through World Economic Outlook (WEO) publication. The IMF World Economic report work as a guide on how economies are likely to shape up in the near and medium terms. Member countries contribute funds to a pool through a quota system from which countries experiencing balance of payments problems can borrow money.
Key Highlights of World Economic Outlook - October 2021
Some of the key highlights of the IMF report are as follows.
- The global recovery continues but the momentum has weakened and uncertainty has increased
- Vaccine access and early policy support are the principal drivers of the gaps
- The October edition of the report is influenced by supply chain issues in advanced economies and worsening health situations in emerging countries.
- The projections for 2021 and 2022 are stronger than in the October 2020 World Economic Outlook.
- Emphasis should be on escaping the health crisis by prioritising health infrastructure, vaccination and treatments
- Monetary policy should be concerned more towards stability
- Priority should be given to green infrastructure investment to mitigate climate change and digital infrastructure investment to create more productivity and equality
- The report has highlighted two key reasons for economic divergences: the first is the large disparity in vaccine access and the second is the disparity in policy support.
- Inflation is projected to peak in the final months of 2021 but is expected to return to pre-pandemic level by mid-2022 for most economies
- 96 per cent of the population in low–income countries remains unvaccinated
- IMF estimates at least 40% vaccination of the population by the end of 2021 and 70% by the mid of 2022
- IMF recent report has cut down the growth projection for the United States( growth rate of 6%) and China (projected growth rate of 8%)
- Downgrade for advanced economies is mainly due to supply disruption
- The outlook for low-income developing countries has darkened due to pandemic dynamics and limited health infrastructure
- International Monetary Fund report indicates an improved growth forecast of the Latin American and Caribbean economy
- IMF reports indicate the worse performance of Brazil and Mexico.
- Beyond 2022 global growth is projected to moderate to about 3.3 per cent over the medium term.
- CPI inflation is expected to accelerate. In 2021-22, the IMF anticipates annual CPI growth of over 4% in more than 70 countries (compared to 54 countries in 2020)
- IMF highlights the disparities in vaccines distribution
- Earlier this year, IMF approved $ 650 billion worth of emergency currency reserves for distribution among the member nations for crisis management
- IMF through its latest report urged vaccine manufacturers to support the expansion of vaccine production in developing countries.
- Clear communication, combined with appropriate monetary and fiscal policies, can help prevent “inflation scares” from unhinging inflation expectations.
IMF's projections about India
- The October edition of IMF World Economic Outlook has raised its 2021 growth forecast for India to 12.5 per cent from 11.5 per cent estimated earlier in January 2021.
- Indian economy is projected to grow by 8.5 per cent in 2022 (Earlier, it was projected 6.9 Percent in April 2021 report)
- The growth rate for India in 2021 is stronger than that of China
- India Job recovery is going to take a while.
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