The International Monetary Fund (IMF) on Tuesday (25th) lowered its forecast for global economic growth this year to 4.4% from a previous forecast of 4.9%, due to the escalating new crown epidemic, supply chain disruptions, rising inflation hindering economic recovery, and Weaker prospects in the United States and China have dragged down global economic growth.
The IMF said in its World Economic Outlook report that it expects global economic growth in 2022 to be lowered to 4.4% from 4.9% forecast in October 2021. The report also pointed out that global economic conditions in 2022 will be weaker than previously expected, and highlighted “downside surprises” since last October’s forecast, such as the emergence of a variant strain of Omicron, and subsequent market volatility.
Growth forecasts for the U.S. and China downgraded
The IMF forecast U.S. economic growth in 2022 at 4.0 percent, 1.2 percentage points lower than its previous forecast of 5.2 percent, as the U.S. Federal Reserve (Fed) withdrew monetary stimulus. In addition, the latest outlook also removes the “Build Back Better” bill signed by President Biden from the baseline forecast after it failed to pass last year after opposition from Senator Joe Manchin.
In China, the IMF will forecast China’s economic growth this year at 4.8% this year, down 0.8 percentage points from its previous forecast of 5.6%, due to disruptions caused by the zero-clearing policy and real estate developers “estimating financial stress.”
Inflation impact
The number of new crown cases in other regions is still high, coupled with rising inflation and energy prices, affecting global economic growth expectations, especially Brazil and Mexico, the IMF lowered their economic growth forecasts by 1.2 percentage points to 0.3% and 0.28%, respectively , said the tightening of monetary policy to combat inflation will put pressure on domestic demand.
While high inflation may last longer than previously expected, inflation is expected to ease later this year as supply-demand imbalances weaken in 2022 and monetary policy in major economies adjusts, the IMF said.
Looking ahead, the report raised its forecast for economic growth in 2023 by 0.2 percentage points to 3.8%, but the IMF only told that this assessment is to exclude the emergence of new strains of new coronavirus variants, and said that any growth depends on equitable global access to vaccines and healthcare resources.
The report said this forecast is based on the assumption that global vaccination rates will increase, treatments will be more effective, and new crown cases will drop to a minimum in most countries by the end of 2022.
