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IMF forecast: global economic recovery will lose some of its strength

2021-10-12T14:45:11.554Z


Delivery bottlenecks in the industrialized countries, ongoing corona crisis in poorer countries: the IMF expects less global economic growth than recently. For Germany, the fund has lowered its forecast significantly.


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Photo: Xiao Yijiu / dpa / XinHua

According to the International Monetary Fund (IMF), the global economy will grow somewhat more slowly this year than expected in July.

The IMF lowered its forecast for growth in 2021 marginally by 0.1 percentage points to 5.9 percent.

For 2022, the fund continues to expect growth of 4.9 percent, announced the IMF.

The current high inflation will normalize again by the middle of next year.

However, the slight change in the global growth forecast conceals significant downgrades for some countries, as chief economist Gita Gopinath explained.

"The outlook for the poorer developing countries has darkened significantly," wrote Gopinath, referring to the economic consequences of the pandemic.

The short-term prospects of the industrialized countries have also deteriorated due to problems with global supply chains, among other things.

This applies, among other things, to Germany: The IMF corrected its forecast for this year by 0.5 percentage points downwards.

The gross domestic product is expected to grow by 3.1 percent in 2021 instead of, as previously expected, by 3.6 percent.

For 2022, the IMF is expecting significantly stronger growth of 4.6 percent.

For the euro zone, on the other hand, the IMF is now expecting growth of five percent, 0.4 percentage points more than in July, as the economic development in Italy and France, among others, is significantly better.

The IMF has lowered its growth forecast for the USA, the world's largest economy, by one percentage point to six percent this year, and raised it slightly to 5.2 percent for 2022.

The downgrades of some countries would be partially offset by better growth prospects for commodity exporters, who benefit from higher prices, said the IMF.

According to the fund's forecast, the recent sharp rise in inflation will not normalize until the middle of next year. The IMF announced that the enormous inflation was mainly due to temporary factors such as the recovery after the corona crisis, the shortage of certain products such as microchips and problems with global supply chains. Higher energy prices also played a role. By mid-2022, however, the inflation rate for most of the world will "probably" fall back to the level it was before the pandemic.

The central banks would therefore have to "walk a fine line" in their monetary policy for the time being.

You would have to weigh the risk of inflation and financial risks against supporting the economic recovery, said IMF chief economist Gopinath.

"Central banks should be prepared to act quickly if the dangers of rising inflation expectations become more tangible in this unprecedented recovery," she wrote.

The IMF now expects an inflation rate of 2.8 percent for the industrialized countries this year and 2.3 percent next year.

fdi / dpa

Source: spiegel

All business articles on 2021-10-12

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