The International Fund (IMF) has acknowledged Pakistan’s stronger economic activity and kept the worldwide growth forecast largely unchanged at six percent for the present year and 4.9pc for the subsequent years.
In its World Economic Outlook (WEO) update released on Tuesday, the IMF revised downward India’s current year growth forecast by three percentage points due to widespread Delta variant and resultant subdued economic activities.
“Projections are revised up for the center East and Central Asia thanks to robust activity in some countries (such as Morocco and Pakistan), partially offset by downgrades of some others,” the IMF noted but didn’t specifically mention Pakistan’s expected rate of growth that it had forecast in April this year at 4pc for 2022 and 5pc by 2026.
The Fund said the 2021 global forecast was unchanged from the April 2021 WEO, but with offsetting revisions. Prospects for emerging markets and developing economies are marked down for 2021, especially for emerging Asia. against this, the forecast for advanced economies has been revised up. These revisions reflect pandemic developments and changes in policy support.
The 0.5 decimal point upgrade for 2022 derives largely from the forecast upgrade for advanced economies, particularly us, reflecting the anticipated legislation of additional financial support within the last 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 general GDP forecast has been downgraded relative to the April WEO on account of subdued boring below the Opec-plus (Organisation of the Petroleum Exporting Countries, including Russia and other non-OPEC oil exporters) quota earlier within the year.
IMF’s Economic Counsellor and Director of the Research Department Gita Gopinath noted that while the worldwide economic recovery continues, a widening gap between advanced economies and lots of emerging market and developing economies was also emerging.
“Our latest global growth forecast of 6pc for 2021 is unchanged from the previous outlook, but the composition has changed,” she said, explaining that growth prospects for advanced economies this year improved by 0.5 decimal point, but this was offset exactly by a downward revision for emerging market and developing economies driven by a big downgrade for emerging Asia.
The IMF 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 to crucial extent differences in pandemic developments because the Delta variant takes over. on the brink of 40pc of the population in advanced economies has been fully vaccinated, compared with 11pc in emerging market economies, and a small fraction in low-income developing countries.
“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.
Talking about emerging market and developing economies (EMDE), the WEO update said the forecast for the group had been revised down 0.4 decimal points in 2021, compared with the April WEO, largely due to growth markdowns for emerging Asian economies. “Growth prospects in India are downgraded following the severe second Covid wave during March-May and expected slow recovery in confidence from that setback,” it added.
Similar dynamics were also noted at adding the Asean-5 group (Indonesia, Malaysia, Philippines, Thailand, and Vietnam) where recent infection waves were causing a haul-on activity. China’s 2021 forecast is revised down 0.3 decimal points on scaling back of public investment and overall fiscal support.
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 about to broaden after being initially concentrated in pandemic-related purchases, durables, and medical equipment. Services trade is predicted to recover more slowly, according to subdued cross-border travels until virus transmission declines to low levels everywhere.