Economics: New IMF report offers cautious optimism

7 April 2021

The new World Economic Outlook (WEO) report from IMF, develops a narrative of cautious optimism, whilst also highlighting the challenges faced by vulnerable people around the World.

Coronavirus is thought to have caused World economic output to fall by 3.3% in 2020 – but this might have been up to three times worse in the absence of aggressive policy measures by governments.

Rollout of vaccines sets the stage for return to growth in 2021 and 2022, with economic “scarring” less severe than was seen in the aftermath of the banking crisis of 2008.

This upbeat view is tempered, however, by concerns over the asymmetrical impact of the Coronavirus impact, with women, youth and less-educated workers suffering most. Many millions have been pushed into extreme poverty by the virus.

High risk and uncertainty remains, but IMF seems upbeat, stating that risk is tilted to the upside in the medium-term, at least on a global level. IMF notes the need for strong international co-operation to manage both biological and economic risk.

Turning to forecasts for the UK specifically, the IMF is slightly more optimistic regarding GDP than the official UK forecasts from OBR, as shown below:

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