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IMF upgrades economic outlook but points to ‘exceptional uncertainty’

The International Monetary Fund (IMF) released its latest world economic outlook update. Revised forecasts predict increased economic growth.
The post IMF upgrades economic outlook but points to ‘exceptional uncertainty’ appeared first on The Motley Fool Australia. –

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The International Monetary Fund (IMF) released its latest world economic outlook update yesterday, forecasting stronger global economic growth than previously expected.

Based in Washington DC, the IMF is a financial institution that consists of 190 countries. Essentially, the IMF endeavours to oversee and steer global monetary policy while also addressing social problems like climate change and poverty.

As part of this work, the IMF releases its world economic outlook update twice a year. The report offers a detailed analysis of the global economy.

So what can we learn from the IMF’s latest report?

Things are looking up

The Australian Financial Review (AFR) points out that the revised January 2021 world economic forecast is up by 0.3 percentage points from the previous outlook.

The revised outlook stems from certain economies navigating through the coronavirus pandemic better than projected. The IMF stated that the increased outlook for 2021 reflected “additional policy support in a few large economies and expectations of a vaccine-powered strengthening of activity later in the year, which outweigh the drag on near-term momentum due to rising infections.”

According to the outlook, third quarter GDP was stronger than expected in a number of countries including Australia, India, Japan, Korea, New Zealand, Turkey and the United States.

The Australian notes today that IMF predicts the Australian economy will grow by 3.5% this year. This is 0.5% higher than October 2020’s forecast.

Uncertain world economic growth

The IMF advises that its latest economic projections come “amid exceptional uncertainty”, largely due to the coronavirus. 

Regarding the IMF’s world economic analysis, the report says that the key underlying uncertainties in the data models are COVID infection numbers and the efficacy of vaccine rollouts.

The outlook strongly advises that vaccines, therapies and containment efforts will have to progress smoothly to meet current growth targets.

However, as reported by the AFR, there’s always the chance that the coronavirus battle could move on more quickly and efficiently than expected, which might result in a global growth that’s stronger than forecasted.

Foolish takeaway

The IMF’s economic outlook is just one available resource to help form your own opinions about the state of the global economy.

Uncertainty and volatility are just as common in big-picture IMF forecasts as they are in the everyday trading markets. For now, it looks like economies around the world are showing signs of improvement. 

Let’s hope that this is a developing trend and we continue to see more of it.

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Motley Fool contributor Gretchen Kennedy has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post IMF upgrades economic outlook but points to ‘exceptional uncertainty’ appeared first on The Motley Fool Australia.

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