October 13, 2021

This Is Why The Latest Projections From The IMF Cause Anxiety In The Market!

 The IMF today released an enlightening report on the direction of the economy. Briefly according to the IMF, continued supply chain disruptions and price pressures constrained the global economic recovery from the Covid-19 pandemic. The IMF has also reduced the economic growth prospects of the United States and other countries.

In its world economic outlook report, the IMF cut its 2021 global growth forecast to 5.9% from a 6.0% forecast released in July. However, the global growth forecast for 2022 is maintained at 4.9%.

According to the IMF, “The prospects for a group of low -income developing countries have become bleak as the spread of pandemics becomes increasingly alarming. The decline in the forecast is also based on the difficult short -term outlook for the advanced economic groups, partly due to supply disruptions. ”

Shortages of key components such as semiconductors, shortages of cargo containers, and shortages of manpower due to supply chains have impacted global manufacturing activities.

The demand and supply gap has pushed up prices and indirectly pushed up inflation. The IMF said it expected inflation to return to pre-pandemic levels next year and at the same time warned that continued inflationary disruptions could negate this.

On a different side the IMF noted U.S. growth. could shrink further as the U.S. Congress has yet to reach a meeting point in Joe Biden’s infrastructure and social spending proposals. The U.S. economic growth forecast fell to 6.0% from 7.0%.

The IMF forecast for Britain’s growth this year dropped just 0.2 points to 6.8%, making it the fastest growth forecast among the G7 economies.