IMF Boosts 2021 Economic Forecast, Putting U.S. GDP Growth at 37-Year High

The International Monetary Fund on Tuesday upgraded its economic forecast for the second time in three months, saying the U.S. will lead developed nations with a 6.4% surge in GDP this year, faster than the 6% global pace.

The jump in GDP follows last year’s 3.5% contraction in the U.S. and a 3.3% retreat globally as the coronavirus pandemic caused more than 2.8 million deaths worldwide. The IMF projection for 2021 would be the highest growth pace in the U.S. since 1984 and the highest on record for the global economy.

The rollout of vaccines and government stimulus such at the $1.9 trillion Covid-19 relief package in the U.S. are helping to boost economic activity, said IMF chief economist Gita Gopinath

“A way out of this health and economic crisis is increasingly visible,” Gopinath said.

In 2022, the IMF predicts, the international economy will grow 4.4%, up from its January forecast of 4.2%, and the U.S. will post a 3.5% rate, which would be the second-fastest pace since 2005.

China, the world’s second-largest economy and the largest developing country, will record a 8.4% growth rate this year and 5.6% in 2022, the IMF estimates.

The 19 countries that share the euro currency probably will expand 4.4% this year and 3.8% in 2022, the IMF said. Japan likely will see 3.3% growth this year and 2.5% in 2022, according to the forecast.

The forecast described 2020 as “a year of terrible loss of lives and livelihoods” due to the Covid-19 pandemic. In the U.S., more than 559,000 people died, representing about 20% of all fatalities in the world.

The vaccine rollouts have accelerated in recent weeks, helping to boost economic prospects across the globe, the IMF report said. More than 710 million vaccine doses have been administered worldwide, including more than 171 million in the U.S.

While some countries have yet to administer their first doses, other countries, such as Israel and Seychelles, have fully vaccinated more than a third of their populations. In the U.S., about 20% of the population has been fully vaccinated.

“Multi-speed recoveries are under way in all regions and across income groups, linked to stark differences in the pace of vaccine rollout, the extent of economic policy support, and structural factors such as reliance on tourism,” the IMF report said.