IMF downgrades 2020 global growth forecast to 4.4 pct amid Omicron surge
The rapid spread of the Omicron variant has led to renewed mobility restrictions in many countries and increased labor shortages, said Gopinath, who was previously the IMFs chief economist.
The IMF expects global growth to slow to 3.8 percent in 2023. This is 0.2 percentage points higher than in the IMFs World Economic Outlook last October and largely reflects a pickup after current drags on growth dissipate, according to the latest report.
Growth will slow as economies grapple with supply disruptions, higher inflation, record debt and persistent uncertainty, First Deputy Managing Director Gita Gopinath told a virtual press briefing.
The IMF has repeatedly stressed the divergence in prospects across countries. While advanced economies are projected to return to pre-pandemic trend this year, several emerging markets and developing economies are projected to have sizeable output losses into the medium-term, Gopinath noted.
The International Monetary Fund (IMF) on Tuesday projected the global economy to grow by 4.4 percent in 2022, down by 0.5 percentage points from Octobers forecast, according to a newly released update to its World Economic Outlook report.
As of now, only 4 percent of the populations of low-income countries are fully vaccinated versus 70 percent in high-income countries, according to the multilateral lender.
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Supply-demand imbalances are assumed to decline over 2022 based on industry expectations of improved supply, as demand gradually rebalances from goods to services, and extraordinary policy support is withdrawn, according to the latest report.
Supply disruptions still weigh on activity and are contributing to higher inflation, adding to pressures from strong demand and elevated food and energy prices, said Gopinath.
At the national level, she said, policies should remain tailored to country-specific circumstances including the extent of recovery, underlying inflationary pressures and available policy space.
There is an urgent need to close the 23.4-billion-U.S.-dollar financing gap for the Access to COVID-19 Tools Accelerator, a global platform led by the World Health Organization, and to incentivize technological transfers to help speed up the diversification of global production of critical medical tools, especially in Africa, Gopinath said.
She added that while Omicron will weigh on activity in the first quarter of 2022, this effect will de starting in the second quarter.
The IMF has revised up 2022 inflation forecasts for both advanced and emerging market and developing economies, with elevated price pressures expected to persist for longer. Assuming inflation expectations remain anchored, inflation is expected to subside in 2023.
