The global economic recovery loses momentum as the resurgence of the coronavirus and widespread supply chain disruptions threaten to put the brakes on a global economy that is trying to balance itself, the International Monetary Fund said on Tuesday.
Turmoil in rich countries has started to weigh on the global outlook in recent months, IMF said in its latest World Economic Outlook Report. The economic growth forecast for the United States has been reduced to 6%, from 7% growth projected in July, due to the slowdown in consumption and sharp declines in inventories caused by bottlenecks in the supply chain. ‘supply. In Germany, manufacturing output has taken a hit because key raw materials are hard to come by. And foreclosure measures over the summer have dampened growth in Japan.
The IMF lowered its global growth forecast for 2021 to 5.9%, from 6% projected in July. The worsening public health crisis due to the Delta variant of the virus has clouded the outlook for developing countries, while shortages weigh on consumption and manufacturing in advanced economies.
“Pandemic epidemics in critical links in global supply chains have resulted in longer-than-expected supply disruptions, further fueling inflation in many countries,” IMF chief economist Gita Gopinath wrote in an introduction to the report. “Overall, the risks to the economic outlook have increased and political compromises have become more complex.”
The IMF has said the biggest threat to the recovery is the spread of more aggressive variants and that ramping up vaccinations is the top priority to accelerate the rebound.
According to the report, 60 percent of eligible populations in advanced economies are now vaccinated, while only 4 percent of those populations in low-income countries have been vaccinated.
The fund 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.
Earlier this year, the IMF approved $ 650 billion in emergency foreign exchange reserves that were distributed to countries around the world. Ms Gopinath called on rich countries to ensure that these funds are used for the benefit of the poor countries that have struggled the most against the fallout from the virus. She also urged vaccine manufacturers to support the expansion of vaccine production in developing countries.
âRecent developments have made it clear that we are all in the same boat and that the pandemic is nowhere over. until it’s over everywhere, âshe wrote.
Global growth is expected to slow to 4.9% in 2022, then slow to around 3.3% in the medium term, the IMF said.