Belgium, (Brussels Morning Newspaper) The International Monetary Fund (IMF) has lowered its global GDP forecast for this year to 4.4%, a reduction of 0.5 percentage points from its October forecast.
According to the IMF, the cut is “mainly because of downgrades for the US and China”, plus uncertainty about the additional risk posed by the coronavirus pandemic, Reuters reported on Tuesday.
Some authorities have re-imposed travel restrictions due to the continued spread of coronavirus, which has increased labour shortages and economic output, the IMF says.
It added that supply chain disruptions are fuelling inflation and predicted that responses by authorities to epidemiological trends in the first quarter of the year will stifle economic activity.
Since the Omicron variant does not cause illness as severe as previous variants, it also predicted that the negative effects on the economy will start to wane after Q1.
Global GDP growth should slow down to 3.8% next year, the IMF states, noting that this is 0.2 percentage points higher when compared to last October’s prediction.
This increase would be largely mechanical, it suggested, since growth would be delayed in the first half of the year and partly moved to 2023.
It predicted that cumulative economic losses would amount to about 13.8 trillion dollars by the end of 2024 because of the coronavirus crisis, more than a billion dollars above the previous forecast of 12.5 trillion.
US, China forecasts down
In stating that it expects the US economy to grow 4% this year, down from last October’s prediction of 5.2%, the IMF notes that the US failed to pass the planned spending package or to tackle shortages, deciding instead to tighten monetary policy.
It claimed the US economy would grow 2.6% next year while pointing out that growth stood at 5.6% in 2021.
Looking to China, the IMF lowered its growth forecast from 5.6% to 4.8% but said it should reach 5.2% in 2023. It attributed the reduced growth prediction largely to the problems property developers are currently facing and restrictions.
The IMF also lowered its forecast for the eurozone this year, expecting GDP to grow 3.9% this year followed by 2.5% in 2023.
This year, it expects inflation to average 3.9% in advanced economies and 5.9% in developing economies this year but suggests this should subside in 2023.
