Global recovery to get more lopsided

Advanced economies have fared better in terms of rebounding from the pandemic than the emerging economies, and the gap will grow wider this year, the IMF said in its latest outlook on the global economy.

The IMF's latest update of the World Economic Outlook leaves this year's global economic forecast unchanged at 6pc. But it has upgraded growth prospects for advanced economies by 0.5 percentage point compared with its April forecast, while downgrading growth expectations for the developing countries.

The strength of the recovery from the pandemic in advanced economies will also drive growth in 2022. The IMF has upgraded its 2022 outlook by 0.5 percentage point to 4.9pc. It estimates that the global economy shrank by 3.2pc last year.

IMF forecasts are used by many economists, including those at the IEA, to model key oil demand projections.

Access to Covid-19 vaccines is a key factor in the economic recovery, IMF economists note. About 40pc of people living in the advanced economies have been vaccinated, compared with only 11pc in the emerging economies.

Lack of access to vaccines, combined with new strains of Covid-19, has a direct effect on the economy. The IMF has downgraded India's projected growth this year by 3 percentage points to 9.5pc. It would take only $50bn to ensure that 40pc of the population of every country is vaccinated by the end of 2021, with that share rising to 60pc by mid-2022, the IMF says in a proposal endorsed by the World Health Organization.

China's growth has also been slightly downgraded to 8.1pc in 2021. But China is an outlier among the emerging economies, since its economy has already returned to its pre-pandemic growth trajectory. The pandemic has reduced per capita incomes in advanced economies by 2.8pc relative to pre-pandemic trends, while the corresponding gap for the emerging economies is 6.3pc.

The IMF has upgraded the US growth forecast by 0.6 percentage points to 7pc this year, with a further 4.9pc expected in 2022. Latin America also will see an upgrade to its forecast for this year, as Brazil and Mexico emerge better than expected from last year's slump. The IMF has downgraded Saudi Arabia's gross domestic product growth forecast to 2.4pc this year, noting the effect of the continued Opec+ production restraint deal.

By Haik Gugarats