x

Economy

IMF Foresees a Slight Drop in Global Growth from Pandemic

October 12, 2021

WASHINGTON — The International Monetary Fund is slightly downgrading its outlook for the global recovery from the pandemic recession, reflecting the persistence of supply chain disruptions in industrialized countries and deadly disparities in vaccination rates between rich and poor nations.

In its latest World Economic Outlook being released Tuesday, the IMF foresees global growth this year of 5.9%, compared with its projection in July of 6%.

For the United Sates, the world's largest economy, the IMF predicts growth of 6% for 2021, below its July forecast of 7%. The downward revision reflects a slowdown in economic activity resulting from a rise in COVID-19 cases and delayed production caused by supply shortages and a resulting acceleration of inflation.

The IMF predicts that for the world's advanced economies as a whole, growth will amount to 5.2% this year, compared with a meager predicted gain of 3% for low-income developing countries.

"The dangerous divergence in economic prospects across countries," the IMF said, "remains a major concern."

The monetary fund expects the total output from advanced economies to recoup the losses they suffered during the pandemic by 2022 and to exceed their pre-pandemic growth path by 2024.

But in emerging and developing countries outside of China, the IMF warns, output will remain an estimated 5.5% below the output growth path that the IMF had been forecasting before the pandemic struck in March of last year. That downgrade poses a serious threat to living standards in those countries, the monetary fund said.

The IMF attributed that economic divergence to the sizable disparities in vaccine access between wealthy and low income countries. It said the outlook for poorer countries had "darkened considerably," reflecting the surge in cases of the delta variant that has elevated the COVID death toll worldwide to nearly 5 million.

While nearly 60 percent of the population in advanced economies are fully vaccinated, only about 4% of the population in the poorer countries are.

Along with lagging vaccination levels, poorer nations face headwinds from a spike in inflation, with food prices rising the most in low-income countries, the IMF said.

The 5.9% rise in global output being forecast in the IMF outlook would represent a sizable gain after a 3.1% decline in output because of the pandemic last year. For 2022, the IMF foresees an expansion of 4.9%, unchanged from its July forecast.

The 6% gain in U.S. growth tis year follows a deep 3.4% contraction in 2020. The IMF expects solid U.S. growth of 5.2% in 2022. For the 19 nations that use the euro currency, the IMF predicts a 5% expansion this year and 4.3% in 2022.

China, the world's second-largest economy, is expected to register growth of 8% this year, down slightly from the IMF's forecast of 8.1% in July, with growth of 5.6% in 2022.

The new World Economic Outlook was prepared for this week's fall meetings of the 190-nation IMF and its sister lending organization, the World Bank, as well as of finance ministers and central bank presidents of the Group of 20 major industrial countries. It was released hours after the IMF expressed confidence in its managing director, Kristalina Georgieva, in response to allegations that while serving as a senior World Bank official, she and others pressured staffers to change business rankings in an effort to placate China. 

The IMF's 24-member executive board said in a statement that a review it conducted "did not conclusively demonstrate" that Georgieva, played an improper role in the situation.

"Having looked at all the evidence presented, the executive board reaffirms its full confidence in the managing director's leadership and ability to continue to effectively carry out her duties," it said.

Among the agenda items for the meetings this week will be efforts to persuade rich nations to fulfill their pledges to boost the level of vaccines going to poor countries as well as a discussion among the G-20 countries over a just-announced global agreement for a 15% minimum tax on corporate profits. Once the agreement is reviewed by G-20 finance officials, it is expected to be endorsed at a leaders' summit of G-20 countries in Rome.

RELATED

Top Stories

Columnists

A pregnant woman was driving in the HOV lane near Dallas.

General News

NEW YORK – Meropi Kyriacou, the new Principal of The Cathedral School in Manhattan, was honored as The National Herald’s Educator of the Year.

Video

Nikki Haley Wins the District of Columbia’s Republican Primary and Gets Her First 2024 Victory

WASHINGTON (AP) — Nikki Haley has won the Republican primary in the District of Columbia, notching her first victory of the 2024 campaign.

‘Apokries’ or Carnival features merriment and meat-eating before the start of Great Lent.

Books of every kind are sent in to the offices of The National Herald, showcasing the impressive range of experience and interests of Greek authors wherever they happen to live.

BALTIMORE, MD – The law firm of Peter Angelos was sold to three of the firm’s longtime senior attorneys on March 1, as ordered by a Baltimore County Circuit Court judge, The Daily Record (TDR) reported, noting that “Judge Keith R.

NICOSIA (AP) — Decades on from the ethnic division of Cyprus, tensions persist along the 180-kilometer buffer zone separating breakaway Turkish Cypriots from Greek Cypriots in the internationally recognized south, the head of the United Nations peacekeeping force on the island said Monday.