All quiet in a Kuala Lumpur shopping mall during one of Malaysia’s pandemic lockdowns, which saw factories cut output due to restrictions on staff numbers, leading to supply shortages elsewhere in the world (Simon Roughneen)
DUBLIN — The International Monetary Fund (IMF) on Tuesday cut its global economic growth forecast for 2021 to 5.9 per cent, citing “uncertainty about how quickly the [coronavirus] pandemic can be overcome.”
In its latest World Economic Outlook, the IMF pared 0.1 percentage points off its July projection, in part due to “advanced economies” being hit by supply-chain disruptions that were exacerbated by recent pandemic outbreaks and lockdowns in Asia’s manufacturing hubs.
Gita Gopinath, the IMF’s director of research, said “global recovery continues but momentum has weakened.”
The IMF said it expects the world’s biggest economy, the US, to grow by 6 per cent this year, one percentage point down on the July outlook, with China, the second-biggest, in line for 8-per-cent expansion.
The Euro area is looking at 5-per-cent growth, though regional powerhouse Germany’s expected 3.1-per-cent growth is set to lag other leading member-states France and Italy, where around 6 per cent is likely, according to the IMF.
Less-developed nations are likely to see reduced growth due to what the IMF labelled “the great vaccine divide,” and “large disparities in policy support” for fiscal spending needed to offset the impact of pandemic restrictions and reboot economies.
With far more people vaccinated in wealthy nations than elsewhere, Gopinath warned of “a dangerous divergence” in growth prospects between advanced and lower-income economies.
According to the IMF, “aggregate output” across advanced economies should return to its “pre-pandemic trend path in 2022 and exceed it by 0.9 per cent in 2024.”
However emerging markets and developing economies are expected by 2024 to languish 5.5 per cent below pre-pandemic forecasts, setting back expected “improvements in their living standards.”
