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 those in the October 2020 WEO report.  The upward revision reflects additional fiscal support in some major economies, the anticipated vaccine-driven recovery in the second half of 2021, and the ongoing adaptation of economic activity to moderate mobility. This outlook is surrounded by considerable uncertainty related to the course of the pandemic, the effectiveness of policy support in bridging the gap toward vaccine-driven normalization, and the evolution of financial conditions.

President Biden’s infrastructure plan will provide another boost to an economy that is already picking up steam. The addition of 916,000 jobs in March should set the stage for much larger gains in the coming months. Most of the 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 conditions and economic activity for the remainder of 2021. Therefore, they are expected to converge toward a solid and relatively balanced global economic recovery in the coming months.

Meanwhile, the PMIs for March 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 rebounded rapidly during the first quarter, ending at a solid pace. After falling just one point from its expansionary peak in October to a still-solid 52.3 in January, the global all-industry PMI 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 Forecasts    

  PMI vs. Global GDP