The International Monetary Fund revised upward its growth estimate for the global economy this year as countries roll out Covid-19 vaccines and the world’s largest economies provide additional support that will strengthen economic activity in the latter part of the year.
The global economy is now set to grow 5.5 per cent this year, 0.3 per cent more than what the fund estimated in October, following a 3.5 per cent contraction in 2020 that paralysed the travel industry, disrupted trade, led to lockdowns across the world, and increased unemployment and poverty, the Washington-based lender said in its latest update to its World Economic Outlook. In 2022, growth is projected to fall to 4.2 per cent.
There is still a great deal of uncertainty and an uneven recovery around the world, depending on how individual countries are faring and the pace of inoculations, the fund said. Last year’s downturn was the worst since the Great Depression with over 150 economies expected to have per-capita incomes below their 2019 levels in 2021. In 2022, the number of countries that see a rebound in their per-capita falls to about 110 economies.
"At $22 trillion, the projected cumulative output loss over 2020-2025 relative to the pre-pandemic projected levels remains substantial," the IMF’s chief economist Gita Gopinath, said.
Despite the rollout of various vaccines "much now depends on the outcome of this race between a mutating virus and vaccines to end the pandemic, and on the ability of policies to provide effective support until that happens. There remains tremendous uncertainty and prospects vary greatly across countries," Ms Gopinath added.
"There is a great deal of uncertainty around this forecast," she said.
"Greater success with vaccinations and therapeutics and additional policy support could improve outcomes, while slow vaccine rollout, virus mutations, and premature withdrawal of policy support can worsen outcomes. If downside risks were to materialise, a tightening of financial conditions could amplify the downturn at a time when public and corporate debt are at record highs worldwide."
On Tuesday, Fitch Ratings said nearly 60 per cent of global bank rating outlooks are still negative and that may persist well into 2021.
Advanced economies are set to expand 4.3 per cent this after shrinking 4.9 per cent in 2020.
The US, the world’s largest economy, which also has the most Covid-19 related deaths at over 431,000, is set to accelerate 5.1 per cent in 2021 after contracting 3.4 per cent last year.
Growth in Germany, Europe’s largest and the world’s fourth-biggest economy, is now expected to increase 3.5 per cent this year, following an estimated 5.4 per cent contraction in 2020. France's economy is expected to rebound with a 5.5 per cent expansion after a deep 9 per cent contraction.
Italy, which was hard hit by the pandemic and had the second-highest number of coronavirus deaths last April, will rebound a modest 3 per cent after a 9.2 per cent contraction.
Spain, which has the tenth-highest number of coronavirus deaths globally, is also expected to grow 5.9 per cent after shrinking 11.1 per cent in 2020.
Growth in China, the world’s second-biggest economy, which implemented strict movement restrictions to contain the pandemic and was able to reopen its economy and grow 2.3 per cent last year, will expand 8.1 per cent this year.
Japan, the world’s third-largest economy, which implemented a state of emergency recently in the wake of a surge of Covid-19 infections, is projected to grow 3.1 per cent after shrinking an estimated 5.1 per cent in 2020.
India, which has the second-highest rate of infections in the world after the US and the third highest number of deaths, will grow 11.5 per cent after contracting 8 per cent last year.
The UK, the world’s sixth-largest economy, which left the EU and is now implementing a strict lockdown after the emergence of a highly infectious Covid-19 variant, is projected to grow 4.5 per cent following a 10 per cent contraction.
In Latin America, where coronavirus infections have surged, the two largest economies, Brazil and Mexico, are projected to register modest recoveries.
Brazil, which has the third highest amount of infections and second most deaths from the pandemic, will grow 3.6 per cent following a 4.5 per cent contraction, while Mexico will expand 4.3 per cent after shrinking 8.5 per cent.
Middle East and Central Asia economies are projected to grow an average 3 per cent this year after shrinking 3.2 per cent.
Saudi Arabia, the Arab world’s largest economy, is set to grow 2.6 per cent after shrinking an estimated 3.9 per cent.
Nigeria, Africa’s largest economy and biggest oil producer, is projected to grow 1.5 per cent after shrinking 3.2 per cent. South Africa, the second-largest and most diversified economy on the continent, is forecast to expand 2.8 per cent after contracting 7.5 per cent.
Global trade volumes, which contracted 9.6 per cent last year, are forecast to grow about 8 per cent in 2021 and then moderate to 6 per cent in 2022, according to the fund’s estimates. Inflation during 2021–22 in advanced economies is projected to remain generally below central bank targets at 1.5 per cent, while emerging market and developing economies inflation is forecast to be just over 4 per cent, lower than the historical average of the group.
Oil prices are expected to rise in 2021 just over 20 per cent from the low base for 2020, but will still remain well below their average for 2019, according to the fund. The average price of oil was $41.29 a barrel in 2020, it said. The assumed price, based on futures markets (as of January 4, 2021), is $50.03 in 2021 and $48.82 in 2022.
The fund reiterated its call for strong multilateral cooperation to combat the pandemic. It called for more funding and wider access to vaccines for all countries. The fund emphasised support to low-income developing countries that saw their debt levels soar as a result of the pandemic and said eligible states should work with creditors to restructure their debt under the Common Framework agreed by the G20.
Governments policies require "an emphasis on advancing key imperatives of raising potential output, ensuring participatory growth that benefits all, and accelerating the transition to lower carbon dependence," the fund said. "A green investment push coupled with initially moderate but steadily rising carbon prices would yield needed emissions reductions while supporting the recovery from the pandemic recession."
Ms Gopinath said the new virus strains are "a reminder that the pandemic is not over until it is over everywhere."
She said the fund estimates faster progress on ending the health crisis, will raise global income cumulatively by $9tn over 2020-25, benefitting all countries.
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
UAE currency: the story behind the money in your pockets
The specs
Engine: Direct injection 4-cylinder 1.4-litre
Power: 150hp
Torque: 250Nm
Price: From Dh139,000
On sale: Now
Try out the test yourself
Q1 Suppose you had $100 in a savings account and the interest rate was 2 per cent per year. After five years, how much do you think you would have in the account if you left the money to grow?
a) More than $102
b) Exactly $102
c) Less than $102
d) Do not know
e) Refuse to answer
Q2 Imagine that the interest rate on your savings account was 1 per cent per year and inflation was 2 per cent per year. After one year, how much would you be able to buy with the money in this account?
a) More than today
b) Exactly the same as today
c) Less than today
d) Do not know
e) Refuse to answer
Q4 Do you think that the following statement is true or false? “Buying a single company stock usually provides a safer return than a stock mutual fund.”
a) True
b) False
d) Do not know
e) Refuse to answer
The “Big Three” financial literacy questions were created by Professors Annamaria Lusardi of the George Washington School of Business and Olivia Mitchell, of the Wharton School of the University of Pennsylvania.
Answers: Q1 More than $102 (compound interest). Q2 Less than today (inflation). Q3 False (diversification).
How the UAE gratuity payment is calculated now
Employees leaving an organisation are entitled to an end-of-service gratuity after completing at least one year of service.
The tenure is calculated on the number of days worked and does not include lengthy leave periods, such as a sabbatical. If you have worked for a company between one and five years, you are paid 21 days of pay based on your final basic salary. After five years, however, you are entitled to 30 days of pay. The total lump sum you receive is based on the duration of your employment.
1. For those who have worked between one and five years, on a basic salary of Dh10,000 (calculation based on 30 days):
a. Dh10,000 ÷ 30 = Dh333.33. Your daily wage is Dh333.33
b. Dh333.33 x 21 = Dh7,000. So 21 days salary equates to Dh7,000 in gratuity entitlement for each year of service. Multiply this figure for every year of service up to five years.
2. For those who have worked more than five years
c. 333.33 x 30 = Dh10,000. So 30 days’ salary is Dh10,000 in gratuity entitlement for each year of service.
Note: The maximum figure cannot exceed two years total salary figure.
The specs
Engine: 1.5-litre turbo
Power: 181hp
Torque: 230Nm
Transmission: 6-speed automatic
Starting price: Dh79,000
On sale: Now
UAE currency: the story behind the money in your pockets
ICC Women's T20 World Cup Asia Qualifier 2025, Thailand
UAE fixtures
May 9, v Malaysia
May 10, v Qatar
May 13, v Malaysia
May 15, v Qatar
May 18 and 19, semi-finals
May 20, final
UAE currency: the story behind the money in your pockets
'Brazen'
Director: Monika Mitchell
Starring: Alyssa Milano, Sam Page, Colleen Wheeler
Rating: 3/5
UAE currency: the story behind the money in your pockets
Off-roading in the UAE: How to checklist
Ireland v Denmark: The last two years
Denmark 1-1 Ireland
7/06/19, Euro 2020 qualifier
Denmark 0-0 Ireland
19/11/2018, Nations League
Ireland 0-0 Denmark
13/10/2018, Nations League
Ireland 1 Denmark 5
14/11/2017, World Cup qualifier
Denmark 0-0 Ireland
11/11/2017, World Cup qualifier
Strait of Hormuz
Fujairah is a crucial hub for fuel storage and is just outside the Strait of Hormuz, a vital shipping route linking Middle East oil producers to markets in Asia, Europe, North America and beyond.
The strait is 33 km wide at its narrowest point, but the shipping lane is just three km wide in either direction. Almost a fifth of oil consumed across the world passes through the strait.
Iran has repeatedly threatened to close the strait, a move that would risk inviting geopolitical and economic turmoil.
Last month, Iran issued a new warning that it would block the strait, if it was prevented from using the waterway following a US decision to end exemptions from sanctions for major Iranian oil importers.
Terminator: Dark Fate
Director: Tim Miller
Starring: Arnold Schwarzenegger, Linda Hamilton, Mackenzie Davis
Rating: 3/5
FFP EXPLAINED
What is Financial Fair Play?
Introduced in 2011 by Uefa, European football’s governing body, it demands that clubs live within their means. Chiefly, spend within their income and not make substantial losses.
What the rules dictate?
The second phase of its implementation limits losses to €30 million (Dh136m) over three seasons. Extra expenditure is permitted for investment in sustainable areas (youth academies, stadium development, etc). Money provided by owners is not viewed as income. Revenue from “related parties” to those owners is assessed by Uefa's “financial control body” to be sure it is a fair value, or in line with market prices.
What are the penalties?
There are a number of punishments, including fines, a loss of prize money or having to reduce squad size for European competition – as happened to PSG in 2014. There is even the threat of a competition ban, which could in theory lead to PSG’s suspension from the Uefa Champions League.
Sholto Byrnes on Myanmar politics
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FULL%20FIGHT%20CARD
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The Bio
Hometown: Bogota, Colombia
Favourite place to relax in UAE: the desert around Al Mleiha in Sharjah or the eastern mangroves in Abu Dhabi
The one book everyone should read: 100 Years of Solitude by Gabriel Garcia Marquez. It will make your mind fly
Favourite documentary: Chasing Coral by Jeff Orlowski. It's a good reality check about one of the most valued ecosystems for humanity
Company%20profile
%3Cp%3E%3Cstrong%3ECompany%20name%3A%20%3C%2Fstrong%3EXare%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarted%3A%20%3C%2Fstrong%3EJanuary%2018%2C%202021%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EFounders%3A%20%3C%2Fstrong%3EPadmini%20Gupta%2C%20Milind%20Singh%2C%20Mandeep%20Singh%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3EDubai%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ESector%3A%20%3C%2Fstrong%3EFinTech%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EFunds%20Raised%3A%20%3C%2Fstrong%3E%2410%20million%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ECurrent%20number%20of%20staff%3A%20%3C%2Fstrong%3E28%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EInvestment%20stage%3A%20%3C%2Fstrong%3Eundisclosed%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EInvestors%3A%20%3C%2Fstrong%3EMS%26amp%3BAD%20Ventures%2C%20Middle%20East%20Venture%20Partners%2C%20Astra%20Amco%2C%20the%20Dubai%20International%20Financial%20Centre%2C%20Fintech%20Fund%2C%20500%20Startups%2C%20Khwarizmi%20Ventures%2C%20and%20Phoenician%20Funds%3C%2Fp%3E%0A
PROFILE OF HALAN
Started: November 2017
Founders: Mounir Nakhla, Ahmed Mohsen and Mohamed Aboulnaga
Based: Cairo, Egypt
Sector: transport and logistics
Size: 150 employees
Investment: approximately $8 million
Investors include: Singapore’s Battery Road Digital Holdings, Egypt’s Algebra Ventures, Uber co-founder and former CTO Oscar Salazar
Batti Gul Meter Chalu
Producers: KRTI Productions, T-Series
Director: Sree Narayan Singh
Cast: Shahid Kapoor, Shraddha Kapoor, Divyenndu Sharma, Yami Gautam
Rating: 2/5
COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3ECompany%3A%3C%2Fstrong%3E%20Vault%3Cbr%3E%3Cstrong%3EStarted%3A%20%3C%2Fstrong%3EJune%202023%3Cbr%3E%3Cstrong%3ECo-founders%3A%20%3C%2Fstrong%3EBilal%20Abou-Diab%20and%20Sami%20Abdul%20Hadi%3Cbr%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3EAbu%20Dhabi%3Cbr%3E%3Cstrong%3ELicensed%20by%3A%3C%2Fstrong%3E%20Abu%20Dhabi%20Global%20Market%3Cbr%3E%3Cstrong%3EIndustry%3A%20%3C%2Fstrong%3EInvestment%20and%20wealth%20advisory%3Cbr%3E%3Cstrong%3EFunding%3A%20%3C%2Fstrong%3E%241%20million%3Cbr%3E%3Cstrong%3EInvestors%3A%20%3C%2Fstrong%3EOutliers%20VC%20and%20angel%20investors%3Cbr%3E%3Cstrong%3ENumber%20of%20employees%3A%20%3C%2Fstrong%3E14%3Cbr%3E%3C%2Fp%3E%0A
Mobile phone packages comparison
Groom and Two Brides
Director: Elie Semaan
Starring: Abdullah Boushehri, Laila Abdallah, Lulwa Almulla
Rating: 3/5
Teaching in coronavirus times
A timeline of the Historical Dictionary of the Arabic Language
- 2018: Formal work begins
- November 2021: First 17 volumes launched
- November 2022: Additional 19 volumes released
- October 2023: Another 31 volumes released
- November 2024: All 127 volumes completed
Other workplace saving schemes
- The UAE government announced a retirement savings plan for private and free zone sector employees in 2023.
- Dubai’s savings retirement scheme for foreign employees working in the emirate’s government and public sector came into effect in 2022.
- National Bonds unveiled a Golden Pension Scheme in 2022 to help private-sector foreign employees with their financial planning.
- In April 2021, Hayah Insurance unveiled a workplace savings plan to help UAE employees save for their retirement.
- Lunate, an Abu Dhabi-based investment manager, has launched a fund that will allow UAE private companies to offer employees investment returns on end-of-service benefits.
Company%20Profile
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New UK refugee system
- A new “core protection” for refugees moving from permanent to a more basic, temporary protection
- Shortened leave to remain - refugees will receive 30 months instead of five years
- A longer path to settlement with no indefinite settled status until a refugee has spent 20 years in Britain
- To encourage refugees to integrate the government will encourage them to out of the core protection route wherever possible.
- Under core protection there will be no automatic right to family reunion
- Refugees will have a reduced right to public funds
ONCE UPON A TIME IN GAZA
Starring: Nader Abd Alhay, Majd Eid, Ramzi Maqdisi
Directors: Tarzan and Arab Nasser
Rating: 4.5/5
THE SPECS
Engine: 6.75-litre twin-turbocharged V12 petrol engine
Power: 420kW
Torque: 780Nm
Transmission: 8-speed automatic
Price: From Dh1,350,000
On sale: Available for preorder now
Our legal columnist
Name: Yousef Al Bahar
Advocate at Al Bahar & Associate Advocates and Legal Consultants, established in 1994
Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers
Company profile
Name: Thndr
Started: October 2020
Founders: Ahmad Hammouda and Seif Amr
Based: Cairo, Egypt
Sector: FinTech
Initial investment: pre-seed of $800,000
Funding stage: series A; $20 million
Investors: Tiger Global, Beco Capital, Prosus Ventures, Y Combinator, Global Ventures, Abdul Latif Jameel, Endure Capital, 4DX Ventures, Plus VC, Rabacap and MSA Capital
