International Monetary Fund (IMF) chief Kristalina Georgieva has said that the prospects for global growth are looking positive, helped by a $1.9 trillion United States rescue package. However, has warned that uneven progress in fighting the coronavirus pandemic could jeopardise economic gains.
Ms Georgieva said that when the IMF releases its updated economic forecast next week, it will show the global economy growing at a faster pace than the 5.5 per cent gain it projected at the start of the year.
Georgieva said that governments around the globe had taken extraordinary actions over the past year including providing a combined $US16 trillion in support and a massive injection of liquidity into the financial sector by the world’s central banks.
She said the world faced “extremely high uncertainty” with so much depending on the path of the pandemic with new strains of the virus now holding back growth prospects, especially in Europe and Latin America.
She said that the IMF estimates that faster progress in ending the health crisis could add almost $9 trillion to global gross domestic product by 2025.
“Given diverging recoveries, it is prudent to keep a close eye on financial risk, including stretched asset valuations,” she said.
She said that major central banks will need carefully communicate their policy plans to prevent excess financial 'volatility' at home and abroad.
Meanwhile, private economists are forecasting that the US economy could grow by 6 per cent to 7 per cent this year, which would be the best performance since 1984. But Georgieva said strong growth in the United States could trigger a rapid rise in interest which could trigger significant capital outflows from emerging market and developing economies.