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International Monetary Fund forecasts lower growth in the US.

2022-01-25T22:15:30.478Z

The IMF anticipates that the coronavirus and inflation will continue to affect world economic growth, which is why it cut its forecasts for the US and China.



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London (CNN Business) -- 

The pandemic will continue to fuel uncertainty and inflation in its third year, undermining the global recovery from the coronavirus and pushing total economic losses toward $14 trillion.


That is what the International Monetary Fund maintains, which on Tuesday cut its global growth forecast for 2022 by half a percentage point, to 4.4%.

The group said the world's two largest economies, the United States and China, will grow more slowly than it predicted in October.

The IMF sees US economic output rising 4% this year, after rising 5.6% in 2021. It cut 1.2 percentage points from its previous forecast due to "lower prospects" that Congress endorse President Joe Biden's Build Back Better economic plan, persistent supply chain disruption, and the growing possibility that the Federal Reserve will take aggressive action to curb inflation.

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In China, economic growth for 2022 is now pegged at 4.8%, 0.8 percentage point lower than previously forecast and a marked slowdown from the 8.1% growth achieved in 2021. The IMF noted the current setback of the country's huge real estate sector and a "weaker-than-expected" recovery in personal spending.

The IMF now expects the pandemic to have cost the world $13.8 trillion in lost economic output by the end of 2024. While advanced economies are expected to return to their pre-pandemic trajectory this year, that is not the case. of "several emerging markets and developing economies", which are still expected to suffer "considerable production losses".

"The last two years reaffirm that this crisis and the ongoing recovery are unlike any other," Gita Gopinath, an economic adviser and director of the International Monetary Fund's Research Department, said in a blog post.

"Policymakers need to keep a close eye on a wide range of incoming economic data, prepare for contingencies, and be ready to communicate and execute policy changes at short notice."

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Rising prices represent a major challenge.

The IMF has revised upwards its estimates of global inflation, anticipating that "high price pressures [will] remain for longer."

Now reckon consumer prices will rise 3.9% in advanced economies this year and 5.9% in emerging market and developing economies, increases steeper than those seen in 2021, when consumer prices rose 3.1% and 5.7%, respectively.

Inflation in advanced economies is expected to fall back towards 2%, the target of most major central banks, in 2023. However, the IMF said a number of conditions will need to be met.

Assuming that inflation expectations do not break out and "the pandemic subsides, the rise in inflation should fade as supply chain disruptions ease, monetary policy tightens, and demand rebalances from energy-intensive consumption." goods to services," the IMF said.

Asian markets fall on Russia-Ukraine tension 0:59

The agency stressed that its forecast is "subject to great uncertainty."

It is on alert for new variants of the coronavirus that could prolong the pandemic, new damage to supply chains due to China's policy of suppressing all Covid-19 outbreaks, and "major inflation surprises" in the United States that could force the Federal Reserve to be even more aggressive with interest rate hikes.

He also cited "rising geopolitical tensions and social unrest" as risks to the outlook.

Western countries are currently engaged in a high-level confrontation with Russia to prevent an invasion of Ukraine.

Economic GrowthIMFInflation

Source: cnnespanol

All news articles on 2022-01-25

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