In its April forecast, the International Monetary Fund (IMF) appears to have an optimistic view on Canada’s ongoing economic recovery, upgrading its 2021 economic outlook for the country by the most among all other developed economies.
According to the World Economic Outlook released on Tuesday, the IMF now calls on growth of 5% for Canada’s economy this year, marking an increase of 1.4% from its previous forecast. The latest update is even more optimistic than the Bank of Canada’s projection of 4% economic growth in 2021— albeit its latest official estimate is from January, when the vaccine rollout was just beginning to gain traction.
Overall, the IMF anticipates global economic output to reach 6% over the course of the year, before advancing by a further 4.4% in 2022. However, the organization did warn that numerous uncertainties continue to exist, such as increasing Covid-19 variants and uneven vaccine rollouts, which could potentially dampen the economic recovery for certain countries.
Moreover, IMF Economic Counsellor and Research Department Director Gita Gopinath also noted in the release that the accelerating recovery in global output could also give rise to unintended consequences, and put the economic rebound at risk. “A high degree of uncertainty surrounds our projections. Faster progress with vaccinations can uplift the forecast, while a more prolonged pandemic with virus variants that evade vaccines can lead to a sharp downgrade. Multi-speed recoveries could pose financial risks if interest rates in the United States rise further in unexpected ways,” she warned.
“This could cause inflated asset valuations to unwind in a disorderly manner, financial conditions to tighten sharply, and recovery prospects to deteriorate, especially for some highly leveraged emerging markets and developing economies.” Gopinath continued. Although the global outlook continues to improve, it will still take some time before economic output reaches pre-pandemic levels. With respect to advanced economies, only the US is expected to surpass its pre-Covid-19 economic growth levels in 2022.
Information for this briefing was found via the IMF. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.