As a result of the lag in vaccinations in developing countries, the outlook for growth is bleak, the International Monetary Fund (IMF) has said.
The IMF reduced the global economic growth predictions on Tuesday, stressing that while industrialized economies are expected to recoup in the near term, low-income developing nations are still grappling with Covid-19 spread.
“The dangerous divergence in economic prospects across countries remains a major concern,” Gita Gopinath, IMF Chief Economist noted.
The International Monetary Fund (IMF) revised its World Economic Outlook, cutting its prediction for global growth in 2021 to 5.9%. (from 6.0 per cent in its July forecast). It kept its growth forecast for 2022 at 4.9 per cent.
However, although advanced economies’ growth is likely to return to pre-pandemic levels in 2022, emerging markets t and developing economies (excluding China) are expected to stay 5.5 per cent below the trend in 2024, according to the research.
Gopinath said the results are “a larger setback to improvements in their living standards.”
The IMF lowered growth estimates for five Southeast Asian nations (Indonesia, Malaysia, Philippines, Thailand, and Vietnam) from 4.3 per cent to 2.9 per cent in 2021, according to the report.
Worker shortages and Covid-19 restrictions in major exporting countries like Vietnam have already been felt in developed countries such as the United States, where corporations like Nike have been hit with inventory shortages.
Also, the IMF downgraded its growth predictions for advanced countries as a result of the supply disruptions.
It now forecasts 6.0 per cent growth for the US economy this year, down from the 7.0 per cent it predicted in June. However, the IMF forecasts a somewhat better year in 2022, with a growth of 5.2 per cent (an upgrade from the 4.9 per cent it forecast in July).
Germany’s, Spain’s, Japan’s, the United Kingdom’s, and Canada’s have their growth chances for 2021 lowered. In 2021, China is expected to grow by 8.0 per cent, down from the 8.1 per cent estimated in July.
The IMF stressed the importance of expanding vaccination programs in low-income nations, where 96 per cent of the population is still unvaccinated, according to the report.
Policymakers should be aware of the risks of inflation, according to the World Economic Outlook, as supply chain issues continue to force prices up.
“If the risks of rising inflation expectations become more serious in this uncharted recovery,” Gopinath said, adding that price increases should slow by mid-2022.
Source: Richard Mensah Adonu | Join our Telegram Group