After a contraction of 8%, International Monetary Fund projects 12.5% growth for India

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IMF's Koeva Brooks: In Pakistan, we are seeing a subdued recovery in Pakistan with growth expected at 1.5% this year, driven by industry & construction.

The U.S. GDP level in 2022 is forecast to be higher than in a non-pandemic scenario - the only large economy for which this is true. Further, it expected the global economy to moderate to 4.4 per cent in 2022. The world output contracted 3.3 per cent in 2020.

The IMF welcomed President Joe Biden's plan to focus on improving USA infrastructure as a way to boost the world's largest economy, a top fund economist said on Tuesday. "Over the past few months, markets have priced a shift towards a less supportive stance by central banks, in response to higher commodity prices; higher domestic inflation; the improved economic outlook and higher U.S. rates -and some central banks have already hiked".

The IMF expects a stronger global recovery and has revised the growth outlook from 5.5% to 6% in 2021. "And then so instead of six (percent growth), it would be four and a half, and for 2022 instead of 4.4 would be 3.4".

However, unlike after the 2008 crisis, it is emerging markets and low-income countries that are expected to suffer greater scarring given their more limited policy space, it said. While every adult in the United States is expected to have access to the vaccine this summer, people in other countries could be waiting until the end of next year, or longer.

The IMF also highlighted that income inequality would likely increase significantly, mainly due to the pandemic. It also warned that growth in the coming expansion may be unevenly spread, with developing economies expected to have bigger losses and slower recoveries.

"Such losses are reversing gains in poverty reduction, with an additional 95 million people expected to have entered the ranks of the extreme poor in 2020 compared with pre-pandemic projections", Ms. Gopinath wrote.

"Policymakers should take early action and tighten selected macroprudential policy tools while avoiding a broad tightening of financial conditions". The path of the pandemic and the ability of the authorities to provide policy support will be important for that outcome.

"While the pandemic continues, policies should first focus on escaping the crisis, prioritising health care spending, providing well-targeted fiscal support, and maintaining accommodative monetary policy while monitoring financial stability risks".

But it said "the outlook presents daunting challenges related to divergences in the speed of recovery both across and within countries and the potential for persistent economic damage from the crisis".

"(M) ultispeed recoveries are underway in all regions and across income groups, linked to stark differences in the pace of vaccine rollout, the extent of economic policy support, and structural factors such as reliance on tourism", the International Monetary Fund said in its report summary. "On the worldwide stage, first and foremost, countries need to work together to ensure universal vaccination".

The IMF said that uneven recoveries are also occurring within countries as young and lower-skilled workers remain more heavily affected.

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