Amid omicron and inflation, IMF lowers global growth forecast

WASHINGTON (AP) – The International Monetary Fund is lowering its forecast for the global economy this year, citing the spread of the omicron variant of COVID-19, rising energy prices, rising inflation and deterioration outlook for the world’s two largest economies – the United States and China.

The 190-country lending agency now forecasts the global economy to grow 4.4% in 2022. That’s down from the 5.9% estimated last year and the 4.9% that the IMF planned for 2022 in October.

The IMF has cut growth forecasts for the United States – the world’s largest economy – to 4% from the 5.2% it forecast in October. The agency is no longer expecting economic stimulus from President Joe Biden’s Build Back Better social policy bill, which has stalled in Congress.

The U.S. economy is also facing supply chain bottlenecks that are preventing businesses from filling customer orders, and the Federal Reserve’s looming decision to raise interest rates to ease the risk. highest year-on-year inflation in four decades.

China’s economy is expected to grow 4.8% this year, down from 8.1% last year and 0.8 percentage point less than the IMF forecast in October. China’s zero-tolerance approach to COVID is likely to have an economic impact, as is the financial stress on property developers in the country, the agency said.

The IMF expects the 19 European countries that share the euro to collectively grow 3.9% this year, up from 5.2% in 2021. Japan is expected to grow 3.3% this year, up from 1.6% last year, due to continued government support for the economy.

The IMF expects inflation to pick up this year and ease in 2023. It sees consumer prices rising 3.9% in advanced economies, the highest since 1991 and rising sharply compared to the 2.3% forecast by the IMF in October. And he predicts inflation of 5.9% this year and developing and emerging economies, the highest since 2011 and up from the 4.9% forecast in October.

The IMF expects inflation to slow next year to 2.1% in advanced economies and 4.7% in developing markets.

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