The International Monetary Fund is striking an optimistic tone on Canada’s recovery from the worst of the COVID-19 pandemic, upgrading its view of Canada’s economic growth this year by the most among all advanced economies.

In its World Economic Outlook published on Tuesday, the IMF said it now expects the Canadian economy to grow five per cent over the course of 2021, 1.4 percentage points higher than its previous forecast. That’s even more optimistic than the Bank of Canada’s expectation for four per cent economic growth this year, though the central bank’s last official estimate was made in January as COVID vaccines were just beginning to be administered.

Overall, the IMF is expecting global economic output will rebound six per cent in 2021, and a further 4.4 per cent in 2022. It did warn, however, that significant uncertainties remain as new COVID variants of concern spread and vaccines are rolled out unevenly across continents and countries.

In a release, IMF Economic Counsellor and Research Department Director Gita Gopinath said a multi-speed global economic recovery could give rise to unexpected circumstances, which could put the recovery at risk.

“A high degree of uncertainty surrounds our projections. Faster progress with vaccinations can uplift the forecast, while a more prolonged pandemic with virus variants that evade vaccines can lead to a sharp downgrade. Multi-speed recoveries could pose financial risks if interest rates in the United States rise further in unexpected ways,” she said.

“This could cause inflated asset valuations to unwind in a disorderly manner, financial conditions to tighten sharply, and recovery prospects to deteriorate, especially for some highly leveraged emerging markets and developing economies.”

While the overall global economic outlook is improving, it will take time for output to return to pre-pandemic levels. Among advanced economies, only the United States is projected to exceed pre-pandemic expectations for overall output in 2022. While the Canadian economy has expanded for nine straight months through January, output remains about three per cent below pre-pandemic levels.