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IMF revises up its projections for global growth

Market Watch – April 9, 2021

April 27, 2021

The International Monetary Fund was in the spotlight this week as it raised global growth prospects Tuesday expecting the world economy to expand by 6% in 2021 versus a January estimate of 5.5%. The estimate – contained in the IMF’s annual spring report – also projected higher, revised full-year growth rates for the U.S. and China at 6.4% and 8%, respectively. Canadian growth was also upgraded for 2021 with projections increasing to 4.7% from 3.6%. A virtual meeting of the world’s top economic officials from the G20 got underway this week to discuss the shape of the postpandemic economy. U.S. Fed Chairman Powell addressed the gathering Thursday saying sluggish progress on Covid-19 vaccination outside the U.S. is a key threat to the global economy. Also, on the virtual meeting agenda is a drive to reach a consensus on minimum global corporate tax rates and how to levy the profits of multinational tech giants. On the U.S. 10- year Treasury watch, yields continued to drop this week from recent highs – trading under 1.7% – stirring a revival in technology stock performance this week. Meantime, the Fed released minutes from its March monetary policy meeting on Wednesday. Most of the 18 central bank officials are expecting interest rates to remain near zero through 2023 with no expressed readiness to tighten monetary policy until the economy further recovers. In China, the country is launching a digital currency – the world’s first – that will be issued by the central bank. It’s expected to give Beijing new tools to monitor its economy and people. The digital yuan is also being positioned for international use where the U.S. dollar has reigned since WWII. In geopolitical news, Western and Iranian officials kicked off talks in Vienna to revive the 2015 nuclear accord.

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