ICAEW chart of the week: IMF world economic outlook update

29 January 2021: The UK economy is expected to shrink over the three years from 2020 to 2022, compared with flat growth in the Eurozone, modest growth by the USA and relatively strong growth by China.

The IMF released updated economic forecasts this week, estimating the world economy shrank by 3.5% in 2020 with output projected to increase by 5.5% in 2021 and 4.2% in 2022. World output over the three years is now expected to see an average annualised growth rate of 2.0%.

The UK’s economy has been one of the hardest hit by the coronavirus pandemic, shrinking by an estimated 10.0% in 2020. Growth prospects are weak, with forecasts of 4.5% and 5.0% in 2021 and 2022 respectively bringing the annualised average growth rate over three years to a negative 0.4%. This contrasts with the 1.4% average growth forecast last year in the Spring Budget 2020, meaning that the UK economy is now projected to be around 4.7% smaller in 2022 than pre-pandemic expectations.

Prospects for the Eurozone countries are also disappointing, with forecast growth in 2021 and 2022 expected to bring their economies back to where they started and substantially below where they might have expected to have been without COVID-19. 

The USA economy appears to be more resilient, with growth in 2021 expected to offset the decline experienced in 2020 by a modest amount, bringing annualised growth over the three years to 1.3%.

In contrast, China expects to see annualised growth of 5.3% as it recovers from much slower than normal growth in 2020 as a consequence of the pandemic. While this is relatively strong compared with most other countries, China itself will consider this to be a relatively modest level of growth compared to the recent past. 

IMF World Economic Outlook Update – summary and selected countries

  2020 2021 2022 Average
 World output (1) -3.5% +5.5% +4.2% +2.0%
 World growth at market exchange rates -3.8% +5.1% +3.8% +1.6%
 Emerging and developing economies -2.4% +6.3% +5.0% +2.9%
 Advanced economies -4.9% +4.3% +3.1% +0.8%
 Eurozone -7.2% +4.2% +3.6% +0.0%
 Argentina -10.4% +4.5% +2.7% -1,3%
 Australia -2.9% +3.5% +2.9% +1.1%
 Brazil -4.5% +3.6% +2.6% +0.5%
 Canada -5.5% +3.6% +4.1% +0.6%
 China +2.3% +8.1% +5.6% +5.3%
 Egypt (2) +3.6% +2.8% +5.5% +4.0%
 France -9.0% +5.5% +4.1% +0.0%
 Germany -5.4% +3.5% +3.1% +0.3%
 India (2) -8.0% +11.5% +6.8% +3.1%
 Indonesia -1.9% +4.8% +6.0% +2.9%
 Iran (2) -1.5% +3.0% +2.0% +1.1%
 Italy -9.2% +3.0% +3.6% -1.1%
 Japan -5.1% +3.1% +2.4% +0.1%
 Kazakhstan -2.7% +3.3% +3.6% +1.4%
 Korea -1.1% +3.1% +2.9% +1.6%
 Malaysia -5.8% +7.0% +6.0% +2.2%
 Mexico -8.5% +4.3% +2.5% -0.7%
 Netherlands -4.1% +3.0% +2.9% +0.5%
 Nigeria -3.2% +1.5% +2.5% +0.3%
 Pakistan (2) -0.4% +1.5% +4.0% +1.7%
 Philippines -9.6% +6.6% +6.5% +0.9%
 Poland -3.4% +2.7% +5.1% +1.4%
 Russia -3.6% +3.0% +3.9% +1.0%
 Saudi Arabia -3.9% +2.6% +4.0% +0.8%
 South Africa -7.5% +2.8% +1.4% -1.2%
 Spain -11.1% +5.9% +4.7% -0.5%
 Thailand -6.6% +2.7% +4.6% +0.1%
 Turkey +1.2% +6.0% +3.5% +3.5%
 UK -10.0% +4.5% +5.0% -0.4%
 USA -3.4% +5.1% +2.5% +1.3%

For more information, read the IMF World Economic Outlook Update.

This chart was originally published by ICAEW.

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