IMF: Vaccines will power 5.5% global economic growth in 2021

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Women carry shopping bags, Thursday, Dec. 10, 2020, in New York. The spread of COVID-19 vaccines will power a stronger global economic recovery in 2021, the International Monetary Fund forecast Tuesday, Jan. 26, 2021. (AP Photo/Mark Lennihan)

WASHINGTON – The spread of COVID-19 vaccines will power a stronger global economic recovery in 2021, the International Monetary Fund forecast Tuesday.

After sinking 3.5% in 2020, the worst year since World War II, the global economy will grow 5.5% this year, the 190-country lending organization predicted. The new figure for 2021 is an upgrade from the 5.2% expansion the IMF forecast in October and would mark the fastest year of global growth since 2007.

The vaccines should contain the spread of the virus and allow governments around the world to ease lockdowns and encourage a return to normal economic activity. The world economy also got a boost from government stimulus programs late last year in the United States and Japan.

But the IMF also says economies worldwide will need support from their governments to offset the damage from the pandemic and warns that coronavirus mutations could cloud the outlook for global health and economic growth.

“Much depends on the outcome of this race between a mutating virus and vaccines and the ability of policies to provide effective support until the pandemic ends,” IMF chief economist Gita Gopinath said at a press briefing Tuesday. “There remains tremendous uncertainty.’’

In an update to its World Economic Outlook, the IMF said that it expects the U.S. economy -- the world’s biggest -- to expand 5.1% this year after collapsing 3.4% in 2020. No. 2 China is expected to record 8.1% growth after eking out a 2.3% increase in 2020.

The 19 countries European countries that share the euro currency will collectively register 4.2% growth this year after seeing economic output crater 7.2% in 2020, the IMF says. The Japanese economy is forecast to grow 3.1%, reversing a 5.1% decline in 2020.

The IMF gave India a big upgrade, thanks to a faster-than-expected recovery at its factories and farms: The Indian economy is forecast to expand 11.5% in 2021, fastest among major economies, and a turnaround from 2020’s decline of 8%.

The agency also expects global trade to rebound this year: recording 8.1% growth after falling 9.6% last year.

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This story has been corrected to show that 2021 forecast would mark the fastest year of global growth since 2007, not since 2010.