The International Monetary Fund has changed its forecast for 2022, while the global economy is struggling against the coronavirus pandemic.
The spread of COVID-19’s omicron variant is worsening the financial forecast, IMF said. Among the evident consequences are higher energy prices, an up tick in inflation and a deteriorating outlook for the United States and China, the two top global economies. The IMF slashed the growth forecast for the US to 4% from the 5.2% it predicted in October. The financial body no longer expects any economic stimulus from President Biden’s Build Back Better social policy bill, which has stalled in Congress.
Meantime, the 190-country lending IMF now forecasts the global economy will expand 4.4% in 2022. That’s down from an estimated 5.9% last year and from the 4.9% the IMF was forecasting for 2022 back in October.
While the US economy is contending with supply-chain bottlenecks that prevent companies from filling customer orders, the Chinese economy is forecast to grow 4.8% this year. In fact, it is down from 8.1% last year and 0.8 percentage points slower than the IMF expected in October.
According to the experts, China’s zero-tolerance approach to the corona pathogen is likely to take an economic toll as is financial stress on the country’s property developers.
What exactly IMF expects in 2022
The IMF expects the 19 European nations that share the EURO currency to collectively grow 3.9% this year, down from 5.2% in 2021. The Asian giant – Japan – is forecast to register 3.3% growth this year, up from 1.6% last year, as a result of continuing state support for the economy hit by the pandemic.
The IMF expects inflation to accelerate this year and fade in 2023. In addition, it sees consumer prices rising 3.9% in advanced economies, the highest since 1991 and up sharply from the 2.3% the IMF forecast in October. As a matter of fact, it sees 5.9% inflation this year and developing and emerging economies, highest since 2011 and up from the 4.9% forecast in October.
In general, the financial agency expects inflation to slow next year to 2.1% in advanced economies and 4.7% in developing markets, AP reported.