IMF head: Global economy at 1945 pivot point as Covid recovery diverges

The IMF will raise its January forecasts for global economic growth of 5.5% in 2021 and 4.2% in 2022.

The IMF will raise its forecast for global economic growth in 2021 and 2022 after last year's 3.5% contraction, but financial conditions remain highly uncertain, said IMF managing director Kristalina Georgieva. 

Ms Georgieva said the global economy was on firmer footing after governments spent some $16 trn (€13.6trn) on fiscal measures to contain the Covid-19 pandemic and mitigate its economic impact. However, developments are diverging dangerously across regions and countries, and even within nations.

"Vaccines are not yet available to everyone and everywhere. Too many people continue to face job losses and rising poverty," she told the Council on Foreign Relations ahead of next week's release of the fund's updated World Economic Outlook. "Too many countries are falling behind."

Ms Georgieva said the world was at a critical turning point, much as it was in 1945 when the IMF and World Bank were created. 

We face the biggest test of our generation. 

"What we do now will shape the post-crisis world."

Ms Georgieva said the IMF would raise its January forecasts for global economic growth of 5.5% in 2021 and 4.2% in 2022 due to increased fiscal spending in the US and prospects for a vaccine-powered recovery in other advanced economies.

She said the US and China were powering a "multi-speed recovery" from the crisis. But low-income countries needed more help, she said, citing new estimates that they would need $200bn (€170bn) over five years to fight the pandemic and $250bn to return to the path of catching up to higher income levels. 

• Reuters