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The global economic recovery from the coronavirus pandemic is weakening and risks are rising, according to the International Monetary Fund.
The IMF on Tuesday slashed its 2021 growth forecast for the United States by one full percentage point to 6%, the biggest reduction suffered by any G7 economy in its latest World Economic Outlook.
The cut reflects disruptions to supply chains and softening consumption in the third quarter, the IMF said.’
The revision comes days after Goldman Sachs cut its growth forecasts for the US economy this year and next, citing weaker consumer spending and the winding down of the government’s Covid-19 relief programs.
Goldman Sachs gets even gloomier on the US economy
Goldman Sachs gets even gloomier on the US economy
The IMF now expects the global economy to grow 5.9% in 2021, 0.1 percentage points lower than the July forecast. The outlook for 2022 remained unchanged. Despite the modest revision, the organization said that economic risks have increased.
“Rapid spread of Delta and the threat of new variants have increased uncertainty about how quickly the pandemic can be overcome,” it said. “Policy choices have become more difficult, confronting multidimensional challenges — subdued employment growth, rising inflation, food insecurity, the setback to human capital accumulation, and climate change — with limited room to maneuver.”
The organization also cut its 2021 growth forecasts for China, Japan and Germany, the world’s next largest economies. It said that shortages of materials were weighing on manufacturing output in Germany, while in Japan emergency coronavirus measures implemented between July and September had dented the recovery.
China’s economy is expected to grow 8% in 2021, slightly less than the July forecast due to a scaling back of public spending, the IMF added. It also flagged “large scale, disorderly corporate debt defaults,” including in China’s property sector, as a risk to financial markets that could “reverberate widely.”
