IMF: Global slowdown faces multiple threats

2022-05-26 0 By

Washington, January 25 (AFP) – Global economic growth has slowed markedly.The IMF warned on Thursday that Omicron, inflation and higher interest rates are all dark clouds hanging over the economic outlook at the start of 2022.It now expects global GROSS domestic product to grow 4.4% this year (down 0.5 percentage points from its October 2021 forecast) and 5.9% in 2021, the report said.Gita Gopinath, until recently the IMF’s number two official, stressed at a press conference: “The omicron strain has led to new restrictions in many countries, exacerbating Labour shortages.”Supply chain turmoil is hampering economic recovery and fuelling inflation, the report said.These factors are compounded by a food and energy crisis.”In addition, record debt and higher inflation limit the ability of many countries to cope with new turbulence,” gopinath said.Average inflation is expected to rise to 3.9 per cent (up 1.6 per cent) in advanced economies this year and 5.9 per cent (up 1 per cent) in emerging and developing countries before slowing in 2023, the IMF said.Most countries are reported to have downgraded their economic growth forecasts.The exceptions are one region (the Middle East and Central Asia) and a handful of countries (India, Japan and Argentina).The IMF explained that the global slowdown was “mainly” due to weaker growth momentum in the US and China.Overall, the recovery will continue, but there are still differences between countries, the report said.The IMF warned that while advanced economies were expected to return to pre-pandemic trends this year, it could not rule out a medium-term recession for some emerging markets and developing economies.The report says there is still a high degree of uncertainty surrounding these expectations, but IMF economists agree there are multiple threats to global growth.The IMF also noted “rising geopolitical tensions,” particularly the conflict between Russia and Ukraine, which could further push up energy prices.Don’t forget, there is also the possibility of mutated strains more dangerous than Omicron.In this context, containment of the pandemic is critical, the report notes, and the IMF reiterates its call for the spread of vaccination in developing countries.About 70 percent of the population in rich countries has been vaccinated, compared with less than 4 percent in poor countries, the report said.