External shocks and new data on the coronavirus could derail the International Monetary Fund’s improved global growth outlook for 2020, according to THE ANALYSTS.

The IMF estimates that the global economy will now shrink 4.4% this year, an upgrade of 0.8 percentage points on the previous forecast in June.

While the new figure would still be the worst annual plunge since the Great Depression of the 1930s, the IMF attributes the slightly less dire forecast to better than expected growth in advanced economies and China during the second quarter, and signs of a more rapid recovery in the third quarter.

The IMF anticipates that social distancing due to the COVID-19 pandemic will continue into 2021, with the world containing the virus by the end of 2022. The multilateral institution, however, predicts a rebound to global growth of 5.2% next year, 0.2 percentage points lower than its June forecast.

Research and Strategy Analyst at Sagicor Investments, Jodian Aris finds the 2021 outlook in particular “interesting”.  She reasoned that it signals the IMF’s anticipation of a quick return to pre-COVID-19 growth levels.

Before COVID-19 (B.C.), in 2019, the world economy grew 2.8%. Aris said she was expecting a return to this level of growth later down in 2022/23, adding that the IMF’s revision means a faster than expected recovery.

In its economic outlook, the IMF upgraded it’s forecast for advanced economies for 2020 to -5.8% followed by a rebound in growth to 3.9% in 2021. There was, however, a downgrade for emerging markets and developing economies, including the Caribbean, which is now projected to contract -5.4% in 2020 and then rebound to 3.9% in 2021.

Aris said the outlook for emerging markets was “two-fold” and was being impacted by the fact that some of these economies still depend on tourism, with some states also vulnerable to external shocks.

“The pick up in tourism is not going to happen as fast,” she said, reasoning that “there is still going to be a lag for us even as we go into 2021”.  She added that growth in countries like Jamaica are also still threatened by disasters including hurricanes.

From the IMF’s numbers, Guyana’s growth outlook leads the Caribbean, with its economy projected to grow 26%. The figure is a downward revision but “still promising in the context of the others,” according to Aris.

The IMF’s positive revision comes even amidst reports of large and small economies being hit with a second wave of the COVID-19 pandemic, as well as news of vaccine trials being halted due to unforeseen complications in patients.

Senior Wealth Advisor at Ideal Portfolio Services, Oric Angus said “it really comes down to the data that they would have gathered and compiled” prior to these recent developments. It means some of the new information was not factored in its update.

The baseline projections in the report, face the possibility of further adjustments depending on what happens over the coming months.