The IMF projects global growth of 6 percent in 2021, moderating to 4.4 percent in 2022 (see attached table). The projections for 2021 and 2022 are stronger than in the October 2020 WEO report.  The upward revision reflects additional fiscal support in some large economies, the anticipated vaccine-driven recovery in the second half of 2021, and the continued adaptation of economic activity to moderate mobility. This outlook is surrounded by considerable uncertainty related to the trajectory of the pandemic, the effectiveness of policy support in providing a bridge to vaccine-driven normalization, and the evolution of financial conditions.

President Biden's infrastructure plan will give another boost to an economy that is already accelerating. The increase of 916,000 payroll jobs in March should set the stage for much bigger gains in the coming months. Most other G10 economies also appear to be leaving the worst of the winter slowdown behind, judging by the improvement in PMIs and other business surveys in February and March.

In Europe and much of the emerging world, market participants are underestimating the likely pace of improvement in both public health and economic activity for the rest of 2021. Therefore, it is expected that they will converge on a solid and relatively balanced global economic recovery in the coming months.

Meanwhile, March PMIs point to upside risks to growth. After a surprisingly modest decline in response to the second wave of the pandemic around the turn of the year, economic activity appears to have picked up rapidly during the first quarter, ending on a solid note. After falling just one point from its peak expansion in October to a still solid 52.3 in January, the global PMI for all industries rose again by 2.5 points to a nearly seven-year high in March. At 54.8, the composite reading is consistent with 3.5% annualized growth in global GDP, while the quarterly average points to 3% growth. (see attached chart)

IMF growth estimates    

  PMI vs. Global GDP