According to the IMF, the US economy is growing at its fastest pace since 1984

According to the IMF, the US economy is growing at its fastest pace since 1984

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The US economy will surpass its size before the pandemic, as growth reaches 6.4% this year, the IMF rose 1.3 percentage points from the group’s forecast in January. The setback will help expand the world economy by 6% in 2021, an upgrade of 0.5 percentage points from the IMF’s previous outlook. The estimates are in line with Wall Street expectations.
“The Biden Government’s new fiscal package will boost US growth by $ 1.9 billion in 2021 and provide a significant positive spread to trading partners,” the IMF said in a report. . Other governments and central banks around the world have also pumped trillions into the world economy.

The IMF said the “unprecedented policy response” to the pandemic means that the “recession is likely to leave smaller scars than the global financial crisis in 2008.” The group estimates that global production will fall by 3.3% in 2020, while the US economy will shrink by 3.5%.

There are already signs that the recovery in the US is starting to increase rapidly. U.S. employers added 916,000 jobs in March, the biggest gain since August. The U.S. manufacturing sector is also roaring ahead, and the ISM manufacturing index recently posted its best reading since 1983.

The IMF expects the introduction of the coronavirus vaccine and the government’s massive stimulus this year to combine to deliver the fastest annual growth rate in the United States since 1984 under President Ronald Reagan. But many other countries will have to wait until 2022 or 2023 to recover all the production lost during the pandemic. According to the IMF, global production growth will slow to 4.4% next year.

“Multispeed recovery is underway in all regions and in income groups, linked to strong differences in the rate of vaccine deployment, the extent of economic policy support and structural factors such as dependence on tourism,” said Gita Gopinath, director of research at the IMF. “The divergent recovery paths are likely to create significantly larger gaps in living standards between developing countries and others.”

The upgraded US forecast means that the world’s largest economy is on track to grow faster than many other developed countries this year. The IMF expects growth of 4.4% in the 19 countries that use the euro, while Europe is fighting another wave of coronavirus, which has forced Germany, France and Italy to tighten restrictions. Production is expected to expand 3.3% in Japan.

But some countries in Asia will still surpass the United States. The IMF expects China, which last year was the only major economy to avoid a recession, to grow by 8.4% in 2021 – much stronger than the country’s official forecast of more than 6%. Production in India will expand 12.5% ​​in the financial year to March 2022.

The IMF attributed continued stimulus from the government and vaccination of vaccines for stronger growth projections. It is said that consumer prices can be volatile, but high levels of inflation are not expected to take root due to weak wage growth and unemployment.

However, the IMF has warned that a ‘high degree of uncertainty’ exists over its projections, reflecting the wide range of potential coronavirus developments. “Greater progress with vaccinations could increase the forecast, while new virus variants that evade vaccinations could lead to a sharp downgrade,” the group said in their report.

While advanced economies have been hit harder than developing countries by the aftermath of the global financial crisis in 2008, the IMF expects the opposite to be true in the pandemic. The group also said that young people, women and unskilled workers are more likely to lose their jobs due to coronavirus.

“Once the health crisis is over, policy efforts can focus more on building resilient, inclusive and greener economies, both to strengthen recovery and to increase potential production,” Gopinath said.

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