I.M.F. Lowers Its Global Economic Growth Forecast
The global growth forecast was pared to 5.9 percent from 6 percent because of the Delta variant and supply chain bottlenecks. The U.S. growth prediction was cut to 6 percent from 7 percent.
The economic recovery is losing strength, the I.M.F. warns as it lowers its forecast.
The fund has warned that disparities in vaccine distribution have created a two-track recovery.Credit…Alisha Jucevic for The New York Times
Oct. 12, 2021, 9:00 a.m. ET
The global economic recovery is losing momentum as the resurgence of the coronavirus and widespread supply chain disruptions threaten to be a drag on a world economy that is trying to find its footing, the International Monetary Fund said on Tuesday.
The I.M.F. lowered its 2021 global growth forecast to 5.9 percent in its latest World Economic Outlook report. The worsening of the public health crisis because of the Delta variant of the virus darkened the outlook for developing countries, while shortages are weighing on consumption and manufacturing in advanced economies.
The weaker forecast, down from the 6 percent growth that was projected in July, reflects the stubborn hold that the pandemic has on the world even as vaccines and treatments are being deployed.
“Pandemic outbreaks in critical links of global supply chains have resulted in longer-than-expected supply disruptions, further feeding inflation in many countries,” Gita Gopinath, the I.M.F.’s chief economist, wrote in an introduction to the report. “Overall, risks to economic prospects have increased, and policy trade-offs have become more complex.”
The I.M.F. said that the biggest threat to the recovery is the spread of more aggressive variants and that speeding up vaccinations is the top priority for accelerating the rebound.
According to the report, 60 percent of the eligible populations in advanced economies are now vaccinated while just 4 percent of those populations in low-income countries have been vaccinated.
The fund has warned that disparities in vaccine distribution have created a two-track recovery, with struggles in the developing world to access and deliver vaccines threatening to prolong the health crisis and economic malaise.
However, in recent months, turbulence in rich countries has begun to weigh on the economic outlook. The economic growth forecast for the United States was pared back to 6 percent from 7 percent because of softening consumption and large declines in inventory caused by supply chain bottlenecks. In Germany, manufacturing output has taken a hit because key commodities are hard to find. And lockdown measures over the summer have dampened growth in Japan.
Earlier this year, the I.M.F. approved $650 billion worth of emergency currency reserves that have been distributed to countries around the world. Ms. Gopinath called on wealthy countries to help ensure that these funds are used to benefit poor countries that have been struggling the most with the fallout of the virus. She also urged vaccine manufacturers to support the expansion of vaccine production in developing countries.
“Recent developments have made it abundantly clear that we are all in this together and the pandemic is not over anywhere until it is over everywhere,” she wrote.
Global growth is expected to slow to 4.9 percent in 2022 and then moderate to about 3.3 percent in the medium term, the I.M.F. said.