The International Monetary Fund (IMF) In its World Economic Outlook (WEO) update has acknowledged Pakistan’s stronger economic activity and kept the global growth forecast largely unchanged at six percent for the current year and 4.9pc for the next year.
The IMF noted that despite near-term supply disruptions, global trade volumes would expand 9.7pc in 2021, moderating to 7pc in 2022. The merchandise trade recovery is set to broaden after being initially concentrated in pandemic-related purchases, consumer durables, and medical equipment. Services trade is expected to recover more slowly, consistent with subdued cross-border travels until virus transmission declines to low levels everywhere.
The IMF revised downward India’s current year growth forecast by three percentage points because of the subdued economic activity because of the widespread Delta variant. “Faster-than-expected vaccination rates and return to normalcy have led to upgrades, while lack of access to vaccines and renewed waves of Covid-19 cases in some countries, notably India, have led to downgrades,” the IMF said.
“Projections are revised up for the Middle East and Central Asia due to robust activity in some countries (such as Morocco and Pakistan), partially offset by downgrades of some others,” the IMF noted.
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The Fund said the 2021 global forecast was unchanged from the April 2021 WEO, but with offsetting revisions. Prospects for emerging market and developing economies have been marked down for 2021, especially for emerging Asia. By contrast, the forecast for advanced economies has been revised up. These revisions reflect pandemic developments and changes in policy support.
The 0.5 percentage point upgrade for 2022 derives largely from the forecast upgrade for advanced economies, particularly the United States, reflecting the anticipated legislation of additional financial support in the second half of 2021 and improved health metrics more broadly across the group.
In Saudi Arabia, the non-oil growth projection has been revised up, but the overall GDP forecast has been downgraded relative to the April WEO on account of subdued oil production below the Opec-plus (Organization of the Petroleum Exporting Countries, including Russia and other non-OPEC oil exporters) quota earlier in the year.
IMF’s Economic Counsellor and Director of the Research Department Gita Gopinath noted that while the global economic recovery continues, a widening gap between advanced economies and many emerging markets and developing economies was also emerging.
Explaining that growth prospects for advanced economies this year improved by 0.5 percentage points, but this was offset exactly by a downward revision for emerging markets and developing economies driven by a significant downgrade for emerging Asia.
The IMF also noted that the Covid-19 pandemic had reduced per capita income in advanced economies by 2.8pc, relative to pre-pandemic trends over 2020-22, compared with an annual per capita loss of 6.3pc a year for emerging market and developing economies (excluding China).
These revisions reflect important extent differences in pandemic developments as the Delta variant takes over. Close to 40pc of the population in advanced economies has been fully vaccinated, compared with 11pc in emerging market economies, and a tiny fraction in low-income developing countries.
Talking about emerging markets and developing economies (EMDE), the WEO update said the forecast for the group had been revised down 0.4 percentage points in 2021, compared with the April WEO, largely because of growth markdowns for emerging Asian economies.
Similar dynamics were also noted at work in the Asian-5 group (Indonesia, Malaysia, Philippines, Thailand, and Vietnam) where recent infection waves were causing a drag on activity. China’s 2021 forecast is revised down 0.3 percentage points on scaling back of public investment and overall fiscal support.
