Global economic growth depends on advanced economies recovering, but isolationism will likely be a theme in the years ahead
The International Monetary Fund (IMF) has recently released its World Economic Outlook report. It has revised higher the gross domestic product (GDP) of America and other advanced economies.
A quick look at low-income economies doesn’t reveal similar upgrades, but the news is still good because low-income economies have a hard time growing without growth in advanced economies. A faster and stronger recovery in the developed world is good for the global economy.
Roaring Recovery in America
Once again, America prepares to lead the world. It did so after the 2008-2009 Great Financial Crisis, and it is doing so again.
While the pandemic is far from over, the American economy has bounced strongly, fueled by fiscal and monetary stimulus. Also, America has moved faster than most of its peers in securing vaccines for its adult population. The country is expected to reach herd immunity by summer.
We can’t say the same about the rest of the world, especially low-income economies. The trend won’t change until the advanced economies reach herd immunity and more vaccines become available to other countries.
So, how is it possible for the US economy to grow at such an impressive rate? In a smart move, the American administration plans to invest in green initiatives and the country’s infrastructure during the years ahead. While this doesn’t depend on outsiders, it will benefit economies in other parts of the world.
Such internal stimulus is likely to be a feature of other advanced economies, too, until global herd immunity is achieved and international travel restrictions are eased.