(IMF) The International Monetary Fund says the global economy will grow by 4.4% this year, below its October forecast of 4.9%.
The IMF cites weak prospects in China and the US in its downgraded growth outlook amid the surging inflation.
The organization expects China to grow by 4.8% in 2022, down by 0.8% from prior forecast, while the US will expand by 4%, down by 1.2%. India is expected to grow the most at 9% from the previous forecast of 8.5%.
IMF says growth in 2023 will moderate at 3.8%, better than previously forecasted. Cumulative growth for the two years will remain 0.3% below previous forecast.
IMF’s Gita Gopinath says the last two years show that the pandemic crisis and ongoing recovery is far from over. She advises policymakers to monitor the economic data and prepare contingencies to tackle emerging needs.
IMF expects the Omicron will impact growth in the first quarter but sees the adverse effects waning in the second quarter if the infections decline and no new variants arise.
The IMF says raising rates by central banks in advanced economies may create financial instability due to high debt levels in less developed economies. The global body calls for international cooperation, including allowing debt restructuring to abate the risks.
The global body sees annual inflation averaging 3.9% this year in the advanced economies, up from 2.3% prior estimate due to supply chain issues. Emerging and developing economies are seen posting a 5.9% inflation in the year.
The global economy grew by 5.9% in 2021, the highest in four decades, after a 3.1% contraction in the Covid-19 hit year 2020.
