27 January 2021
4 mins clock icon

Daily Outlook: IMF upgrades 2021 global growth forecast

The IMF expects the world economy to grow 5.5% this year.

By Daniel Richards

  • The IMF has upgraded its forecast for world GDP growth to 5.5% from 5.2% previously, citing the coronavirus vaccine rollout and additional policy support from some major economies.  However the report noted that new waves and strains of infection pose a risk to the recovery and that growth would be uneven across different countries. A better outlook for the US economy was the main driver of the higher growth forecast this year, with growth forecasts for most other developed economies revised lower. Within emerging markets, India’s growth forecast was revised higher to 11.5% while China’s was revised slightly lower to 8.1%. The IMF’s growth forecast for 2022 remained unchanged at 4.2%.
  • In the region, the IMF kept its 2021 forecast for the Middle East and Central Asia unchanged at 3.0% this year, but downgraded its estimate for Saudi Arabia to 2.6% from 3.1% previously.  Full regional forecasts will be published in the Middle East and Central Asia Regional Economic Outlook in April.
  • Unemployment in the UK rose to 5.0% in the three months to November, the highest rate since 2016 but slightly lower than the market was expecting.  The extension of the government’s furlough scheme from November through to April will help save jobs and the Chancellor has indicated that he may consider additional support measures beyond April. 828k people have lost their jobs in the UK since the start of the pandemic in February 2020.  
  • US consumer confidence rose to 89.3 in January from 88.6 in December as consumers were more optimistic about the outlook for the economy, even as their assessment of present conditions was worse than last month. The main reasons for higher optimism were expectations of additional fiscal stimulus and the rollout of coronavirus vaccines. All eyes will be on the FOMC today where Jerome Powell is expected to reiterate that discussion about tapering asset purchases is premature. 
  • Saudi Arabia raised USD 5bn in a two-part bond issue making it the third GCC country to tap debt markets this month. We estimate the budget deficit at USD 40bn this year so the kingdom is likely to issue more USD debt this year.

Today’s Economic Data and Events

  • US durable goods orders: 17:30 forecast 1.0%
  • US FOMC rate decision: 23:00 forecast 0-0.25%

Source: Bloomberg, Emirates NBD Research


Fixed Income

  • Treasury markets showed little change overnight as the market awaits the end of the FOMC meeting later today. We don’t expect any change to Fed policy, either on rates or asset purchases, but language about the outlook for the economy will be in focus. Yields on the 2yr UST were marginally higher at 0.1211% while the 10yr moved back above 1.03%.
  • Bond markets elsewhere also showed limited change. High yield and emerging market bond indices both ended the day higher albeit by less than 0.1% for each.
  • Saudi Arabia has hit the markets for the first time in 2021 with a USD 5bn dual-tranche issue. A 12yr USD 2.75bn will price at UST+130bps while a USD 2.25bn 40yr will price at 3.45%..


  • The DXY index continues to trade within a narrow price range between 90.6 – 90.0 but once again fell to seller bias and currently sits 0.2% lower at 90.220. Sterling reached its highest level since April 2018 at 1.3752 amid improved risk appetite and strong UK jobs figures.
  • A positive shift in sentiment provided a boost for the AUD and NZD as well, although those gains have fallen off slightly this morning. Both currencies are up by over 0.3%, trading at 0.7740 and 0.7230 respectively.


  • Despite the S&P 500 hitting fresh highs on intraday trading, the benchmark US equity index ended the day down modestly at -0.2%, while the Dow Jones and the NASDAQ both lost -0.1%.
  • Things were more positive in Europe after a poor start to the week, as the DAX closed 1.7% higher, the CAC 0.9% and the FTSE 100 0.2%. Positivity among German exporters contributed to the DAX’s strong gains.
  • Within the region the DFM lost -0.9% and the Tadawul -0.7%, while the EGX30 closed 0.2% higher.


  • Oil prices ended the day mixed with Brent futures showing a small upward move after some choppy trading while WTI futures closed lower. However, both are holding in their range of around USD 54-56/b for Brent and USD 51-53/b for WTI.
  • API data reported a sizeable draw in US crude inventories last week, helping to potentially reverse some of the prior week’s gains. The agency estimates stocks fell 5.3m bbl last week although there were gains in both gasoline and distillates inventories.
  • OPEC’s secretary general, Mohammad Barkindo, noted that the backwardation in the oil futures curve points to a robust year for prices ahead. Time spreads for 1-6 month Brent contracts have widened to around USD 1.40/b currently from around USD 0.4/b at the start of the year.

Click here to download charts and tables

Written By

Daniel Richards Senior Economist

Edward Bell Head of Market Economics


Emirates NBD Research Research Analyst

Khatija Haque Head of Research & Chief Economist

There was an error during your feedback!

Your feedback is valuable to us and will help us improve.

Daniel Richards

Related Articles

Subscribe to our newsletter and stay updated on the markets

There was an error during your newsletter subscription!

Please try again to stay updated with all the latest financial news and valuable insights.

Thank you for newsletter subscription!

To stay updated with all the latest financial news and valuable insights.