The International Monetary Fund (IMF) has projected for global growth to strengthen to 3.3 percent this year and 3.4 percent in 2021.
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This was considered a positive increase after the slowing of growth in 2019 recorded at 2.9 percent.
The IMF managing director, Kristalina Georgieva, expressed her view on the IMFBlog website that the global economy is still far from on solid ground despite these increasing global growth projections.
“While some uncertainties have receded, new ones have emerged. The truth is that uncertainty is becoming the new normal,” she wrote.
She also highlighted that the Novel Coronavirus is currently the most pressing uncertainty. According to Georgieva, depending on how quickly the spread of the virus is curbed to limit further disruptions, once achieved the IMF expects the Chinese economy to bounce back soon.
While there has been a sharp drop in gross domestic product (GDP) growth in China for the first quarter of the year, it should only be a small reduction on the entire year.
However, a long-lasting outbreak could pose a more severe impact that could result in a more-protracted growth slowdown in China.
The IMF also estimates that the Phase 1 trade deal between the United States and China will reduce the drag from trade tensions on the level of GDP this year by 0.2 percent.
She also pressed the issue of climate change over which the economic costs could pose a global effect as well. IMF staff estimate that a typical climate-related natural disaster reduces growth by an average of 0.4 percent in the affected country.
Georgieva also encourages countries to invest in high-quality education, research and development and digitalisation because the current low-interest-rate environment means that policymakers may have additional money for expenditure.
“Reducing deficits when needed should always be done in a way that protects essential social spending. This is how countries can increase access to opportunities for all and build a stronger foundation within their own economies,” she said.