The global economy is now projected to grow 5.9 percent in 2021 and 4.9 percent in 2022, 0.1 percentage point lower for 2021 than in the July 2021 World Economic Outlook, the International Monetary Fund said on Tuesday in its latest global projection.
Releasing its October World Economic Outlook from Washington D.C., the IMF asserted that the downward revision for 2021 reflects “a downgrade for advanced economies—in part due to supply disruptions—and for low-income developing countries, largely due to worsening pandemic dynamics.”
“This is partially offset by stronger nearterm prospects among some commodity-exporting emerging market and developing economies,” the IMF said in the report’s executive summary, adding that employment is generally expected to continue lagging the recovery in output.
Beyond 2022, IMF said global growth is projected to moderate to about 3.3 percent over the medium term, while advanced economy output is “forecast to exceed pre-pandemic medium-term projections—largely reflecting sizable anticipated further policy support in the United States that includes measures to increase potential.”
“By contrast, persistent output losses are anticipated for the emerging market and developing economy group due to slower vaccine rollouts and generally less policy support compared to advanced economies,” IMF said.
The global lending institution warned against the threats of inflation, saying that “great uncertainty surrounds inflation prospects—primarily stemming from the path of the pandemic, the duration of supply disruptions, and how inflation expectations may evolve in this environment.”
It wrote, “Overall, the balance of risks for growth is tilted to the downside. The major source of concern is that more aggressive SARS-CoV-2 variants could emerge before widespread vaccination is reached.
“Inflation risks are skewed to the upside and could materialize if pandemic-induced supply-demand mismatches continue longer than expected (including if the damage to supply potential turns out worse than anticipated), leading to more sustained price pressures and rising inflation expectations that prompt a fasterthan-anticipated monetary normalization in advanced economies (see also the October 2021 Global Financial Stability Report).
“Multilateral efforts to speed up global vaccine access, provide liquidity and debt relief to constrained economies, and mitigate and adapt to climate change remain essential. Speeding up the vaccination of the world population remains the top policy priority, while continuing the push for widespread testing and investing in therapeutics. This would save millions of lives, help prevent the emergence of new variants, and hasten the global economic recovery.”