IMF says global economic recovery growing stronger, but concerns linger

A top official at the International Monetary Fund (IMF) said Saturday that the global economic recovery from the coronavirus pandemic is growing, but that concerns remain over possible pitfalls.

IMF First Deputy Managing Director Geoffrey Okamoto, the No. 2 IMF official, said in a speech to the China Development Forum that he was optimistic that the economic rebound in 2021 could exceed expectations but said unequal recoveries in countries across the globe could impact the international bounce back.

“In January, we projected 2021 global growth at 5.5 percent, but prospects of a stronger recovery are emerging – because of additional fiscal stimulus, especially in the U.S., and the prospects of broader vaccination,” he said. 

President Biden earlier this month signed the American Rescue Plan, a $1.9 trillion stimulus package that provided aid for increasing vaccinations, stimulus checks for those under a certain income threshold and funding for small businesses, among other things. 

The Biden administration, including Treasury Secretary Janet Yellen, have stated that a “bold” stimulus package was needed to help bolster the U.S.’s economic recovery. 

“However, the global recovery has been incomplete and unequal,” he added. “It is incomplete because despite a stronger than expected recovery in the second half of 2020, GDP remains well below pre-pandemic trends in most countries. The recovery paths have also been different across countries, as well as across sectors.”

Okamoto specifically pointed to China’s strong recovery compared with those of nations that are struggling to return their economies to pre-pandemic growth levels. 

“China, in many ways, has already completed its recovery, returning to its pre-pandemic growth levels ahead of all large economies,” Okamoto said. 

“But growth still lacks balance, with private consumption lagging investment. We expect consumption will catch up, as investment growth normalizes. But there are significant risks which I will describe momentarily,” he said.

“Outside of China, though, there are worrying signs that the gap between advanced economies and emerging markets is growing.” 

Okamoto also pointed to uncertainty as to how long the pandemic would last as well as the risk of a spike in infections from new variants. He said increased vaccinations and coordination among nations would be crucial in ending the pandemic, which would, in turn, ramp up economic recoveries.

“[T]he international community must come together and help each other to end this pandemic and lay the foundation for a more balanced, inclusive, and sustained global recovery for all,” he concluded.

Earlier this week, the Biden administration announced that it would loan some 4 million of the vaccines made by AstraZeneca to U.S. neighbors Mexico and Canada. 

Brazil’s foreign ministry also announced on Saturday that the country is in conversations to potentially receive doses of coronavirus vaccines as the nation continues to be ravaged by the disease.