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.

It said that the GDP growth would remain at 1.5 percent during the ongoing fiscal year and would witness an upward trend to touch the four percent mark in 2022.

The IMF's projection is more sanguine compared to the 3 percent growth estimate by the Bank of Korea and the 3.2 percent growth forecast made by South Korea's Finance Ministry.

Because a financial crisis was averted, medium-term losses are expected to be smaller than after the 2008 global financial crisis, at around 3%.

The global economy shrank by 4.3 per cent previous year, over two-and-a-half times more than during the global financial crisis of 2009.

Among emerging markets and developing economies, China is projected to grow by 8.4 per cent this year, 0.3 percentage point above the January forecast, according to the report.

After an estimated contraction of 3.3% in 2020 (calendar year), the global economy is expected to grow 6% this year and 4.4% next year, though there are significant divergences within and between countries.

Among emerging markets and developing economies, China was projected to grow this year at 8.4 per cent, she said.

Yellen recently called on the 20 largest economies to work together to "stop the race to the bottom" by setting a new minimum that would allow governments more stability in collecting tax revenue.

"The recovery is expected to be asynchronous and divergent between advanced and emerging market economies", the International Monetary Fund said, noting that given large external financing needs, emerging markets face daunting challenges, especially if a persistent rise in United States rates brings about a repricing of risk and tighter financial conditions.

The fund's outlook for EM economies rose by just 0.4 percentage point - half of the advanced economy mark-up - to 6.7% from the view in January.

On the other hand, an extended period of the unprecedented financial support measures, that the countries have taken globally in order to contain the pandemic repercussions, may lead to overly stretched valuations and fuel financial vulnerabilities that could put global growth at risk and hinder its recovery.

"We do see signs in some countries that hesitancy is more of an issue", she said.

IMF Chief Economist Gita Gopinath said that the fund has been calling for global cooperation on tax policy "for a long time", adding that different corporate tax rates around the world have fueled tax shifting and avoidance. Concerns about the credit quality of hard-hit borrowers and the profitability outlook are likely to weigh on the risk appetite of banks during the recovery, said the report.

In 2021, consumer prices are expected to increase by 0.7%, compared to 0.8% projected in October.

The report said that emerging market economies are expected to suffer arduous challenges due to the large financing needs that they require in 2020.

The agency also warns that recoveries are diverging dangerously within and between countries.