IMF gives more dire outlook for Canada’s economy
The International Monetary Fund on Tuesday gave a more dire outlook for Canada’s economy, slashing its 2021 GDP outlook for the country to 3.6 per cent from 5.2 per cent, but didn’t outline a specific reason for the move.
The IMF raised its forecast for global economic growth in 2021 and said the coronavirus-triggered downturn in 2020 would be nearly a full percentage point less severe than expected.
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 the 2010 snapback from the financial crisis.
The pandemic is exacerbating inequality, with close to 90mn people likely to fall into extreme poverty in 2020 and 2021, the fund said. It sees the global economy losing $22tn in output from 2020-2025 relative to pre-pandemic projected levels.
The fund sees major central banks holding their policy-rate settings through 2022, with financial conditions remaining at current levels for advanced economies and improving for emerging-market and developing nations.
The US saw one of the biggest upgrades after approving a $900bn relief plan. The IMF forecasts the world’s largest economy may grow 5.1% this year, versus 3.1% in October. The projection doesn’t incorporate President Joe Biden’s proposal for $1.9tn more in aid, which the IMF preliminarily estimates would add another 1.25% to output this year and 5% over the next three years, Gopinath said in a briefing yesterday.
Japan, which has announced its own stimulus of more than $700bn, also saw a significant upward revision. The fund now projects 2021 economic growth at 3.1% compared with 2.3% previously.
Overall, advanced economies will see output losses compared to pre-pandemic projections that are relatively smaller than elsewhere thanks to fiscal and monetary policy support and earlier, widespread access to vaccines.