The International Monetary Fund (IMF) on Tuesday increased its projection for global economic growth to 5.5 percent for the year, a 0.3 percent bump from its October forecast.
IMF Chief Economist Gita Gopinath said the uptick is due in part to the advent of highly effective coronavirus vaccines, but noted that risks remained.
“It reflects the positive effects of the vaccine success that we saw towards the end of last year and the additional policy support that was provided in some countries,” she said.
“But it has been offset some by the resurgence of virus in several economies and the containment measures that have been put in place that are having a negative effect on activity,” she added.
Rolling out the vaccines and therapies across the world, Gopinath said, is key to keeping the global economy growing. She also warned against early austerity measures, saying that fiscal policy should be used to boost the recovery and monetary policy should stay loose as long as inflation remains at bay.
The global economy is projected to grow at a slower 4.2 percent rate in 2022.
The forecast has the U.S. economy growing at 5.1 percent, a significant 2-point rise over its last projection, based on the economic growth seen at the end of last year as well as the significant boost in fiscal support.
Congress approved a $900 billion COVID-19 relief package last month, and President Biden has made another $1.9 trillion proposal a top priority of his first days in office.
The projection also sees a slower growth rate in the euro zone, reduced by a point to 4.2 percent.
China, which saw the first COVID-19 outbreaks but also managed to get the virus under control effectively, will see its economy grow at 8 percent this year, the IMF projects.