IMF projects China's economy will grow 8.1% in 2021 and 5.6% in 2022. The global growth is expected to be 5.5% in 2021 and 4.2% in 2022 after an estimated 3.5% contraction in 2020, according to the latest World Economic Outlook (WEO) released on Tuesday.
The projection on global growth was revised up 0.3 percentage points from the forecast in October 2020. IMF's chief economist attributed the rise in the latest forecast to expectations of a vaccine-powered strengthening of activity and additional policy support in a few large economies.
The IMF raised China's 2020 economy growth forecast from the previous 1.9% made in October to 2.3%. The higher economic base dragged down its 2021 forecast from 8.2 percent to 8.1%, which still leads the growth among major economies. China was the first to return to its pre-epidemic forecast growth rate in the fourth quarter of 2020.
According to IMF projections, the growth in 2021 for the US is 5.1%, EU 4.2%, Japan 3.1%, the UK 4.5% and 4.3% for all advanced economies. India's projection for 2021 is as high as 11.5%, but from negative growth of 8.0% in 2020.
While IMF said that global activity will remain well below pre-COVID-19 of January 2020 WEO projections, economies will follow differentiated and diverging recoveries.
IMF pointed out that considerable differentiation is expected between China - where effective containment measures, a forceful public investment response, and central bank liquidity support have facilitated a strong recovery - and other economies, especially emerging markets and developing economies.
Consistent with recovery in global activity, global trade volumes are forecast to grow by 8.1% in 2021, before moderating to 6.3% in 2022. Services trade is expected to recover more slowly than merchandise volumes, which is consistent with subdued cross-border tourism and business travel until transmission declines everywhere, per WEO report. Strong multilateral cooperation is required to bring the pandemic under control everywhere, IMF concluded.