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The International Monetary Fund on Tuesday revised this year’s growth forecast for the eurozone up to 4.4 percent of economic output.
The upward revision of 0.2 percentage points comes on the back of strong public initiatives to protect workers and firms from the pandemic, such as the EU’s €750 billion recovery fund and the U.S.’s $1.9 trillion stimulus package.
The Washington-based fund’s World Economic Outlook also boosted its forecast for the global economy, anticipating vaccine rollouts over the summer that will strengthen economic recovery through the second half of the year.
Global output, as a result, is set to increase by 6 percent this year before moderating to 4.4 percent in 2022, the IMF outlook said.
“Thanks to unprecedented policy response, the COVID-19 recession is likely to leave smaller scars than the 2008 global financial crisis,” the IMF said. “However, emerging market economies and low-income developing countries have been hit harder and are expected to suffer more significant medium-term losses.”
Tuesday’s growth forecast is subject to high uncertainty. New strains of the coronavirus could emerge and prolong the pandemic if vaccines prove ineffective against them, the IMF warned.
“Policymakers should prioritize policies that would be prudent, regardless of the state of the world that prevails,” such as safeguards against unemployment, health care and green infrastructure to tackle climate change, the IMF said.
The IMF’s new forecast is rosier than that of the Organization for Economic Cooperation and Development, which last month said the global economy will expand by 5.6 percent in 2021.
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