The global economy is projected to grow by 6 percent in 2021, moderating to 4.4 percent in 2022, after an estimated contraction of –3.3 percent in 2020, which reflects an improved outlook, according to the International Monetary Fund (IMF).
The figures came within the global economic outlook update report the IMF released on Tuesday as a part of its and the World Bank’s spring meetings, which kicked off on Monday.
The contraction for 2020 is 1.1 percent lower than projected in the October 2020 world economic outlook, reflecting the higher-than-expected growth outturns in the second half of 2020 for most regions after lockdowns were eased and as economies adapted to new ways of working, according to the report.
It also attributed the revising up of projections for 2021 and 2022 — 0.8 percentage point and 0.2 percentage point stronger than in the October 2020 report — to the additional fiscal support in a few large economies and the anticipated vaccine-powered recovery in the second half of 2021.
Over the medium term, the report expected global growth to go down to 3.3 percent, reflecting projected damage to supply potential and forces that predate the pandemic, including aging-related, and slower labor force growth in advanced economies and some emerging market economies.
Egypt’s growth slows down in 2021 to rebound in 2022
For Egypt, the report expected its real GDP growth to deaccelerate to 2.5 percent in 2021, down from 3.6 percent in 2020, before rebounding by around the double to reach 5.7 percent in 2022.
Egypt’s inflation rate is projected to decline to 4.8 percent in 2021, down from 5.7 percent in 2020, before soaring to 7.2 percent in 2022, according to the report.
Moreover, the country’s current account balance is expected to continue to see negative performance estimated at -4 percent in 2021 and 2022, compared to -3.1 percent in 2020.
Egypt is also expected to experience an increase in unemployment rate to reach 9.8 percent and 9.4 percent in 2021 and 2020, respectively, up from 8.3 percent in 2020, according to the report.
For Middle East and Central Asia (MCD), the report expected the region’s growth to bounce back at 3.7 percent and 3.8 percent in 2021 and 2022, respectively, after an estimated decline of -2.9 percent in 2020.
Emerging markets, developing economies to bounce back
Emerging markets and developing economies are projected to see a rebound in exports at 7.6 percent during 2021, up from -5.7 percent in 2020, after declining to 6 percent in 2022, according to the report.
The Middle East and North Africa (MENA) region is expected to see a slowdown in it growth to reach 3.8 percent and 3.5 percent in 2021 and 2022, respectively, after a contraction of -4.7 percent seen in 2020 amid the pandemic.
“In emerging market and developing economies, vaccine procurement data suggests that effective protection will remain unavailable for most of the population in 2021. Lockdowns and containment measures may be needed more frequently in 2021 and 2022 than in advanced economies, increasing the likelihood of medium-term scarring effects on the potential output of these countries”, said the report.
Compared to the 2008 global financial crisis, the report said that the COVID-19-associated recession is expected to leave smaller scars on the global economy, however, emerging market economies and low-income developing countries have been hit harder and are expected to suffer more significant medium-term losses, according to the report.
It also stressed that a high uncertainty still surrounds the global outlook.
Concerning global oil prices, the report expected to witness a downward path with oil prices at $58.5 a barrel in 2021 — 42 percent higher than the 2020 average — falling to $50.7 in 2025.
It attributed such a decline to a temporary tight demand-supply balance expected in 2021 — in line with International Energy Agency projections of a steady decline in oil inventories, with oil demand (supply) projected at 96.4 million barrels per day (95.5 million barrels a day) in 2021.
“Although oil prices persistently above $60 a barrel may induce a substantial production recovery of higher-cost producers in non-OPEC+ countries, including the US shale oil, most of them seem focused on balance sheet repair.”
“Risks to oil prices are slightly tilted to the upside, as upside risks from large cuts in oil and gas upstream investments exceed downside risks from a setback in global oil demand recovery, still elevated inventories, and, in the medium term, a breakdown of the OPEC+ coalition,” the report explained.