The International Monetary Fund (IMF) has reduced its forecast for the growth of the world economy this year marginally by 0.1 percentage points to 5.9 percent.
As in the previous forecast from July, the IMF continues to expect growth of 4.9 percent for 2022, as the organization said on Tuesday.
However, the slight change in the global growth forecast conceals significant downgrades for some countries, as chief economist Gita Gopinath explained. "The outlook for the poorer developing countries has darkened significantly," wrote Gopinath, referring to the economic consequences of the pandemic. The short-term prospects of the industrialized countries have also deteriorated due to problems with global supply chains, among other things. The downgrades would be partly offset by better growth prospects for commodity exporters, who benefit from higher prices.
For Germany, the IMF corrected its forecast for this year by 0.5 percentage points downwards: The gross domestic product is expected to grow by 3.1 percent in 2021.
For 2022, the IMF expects strong growth of 4.6 percent.
The IMF raised its forecast for the euro zone for 2021 by 0.4 percentage points to 5 percent - supported in part by stronger expected growth in Italy and France.
Monetary policy on a fine line
The IMF lowered the growth forecast for the USA, the world's largest economy, by one percentage point to 6 percent this year, and raised it slightly to 5.2 percent for 2022.
The IMF expects the inflation rate, which has recently risen sharply, to normalize in the middle of next year. The high rate of inflation was mainly due to temporary factors such as the recovery after the corona crisis, the shortage of certain products such as microchips and problems with global supply chains, the IMF said on Tuesday. Higher energy prices also played a role. By mid-2022, however, the inflation rate for most of the world will "probably" fall back to the level it was before the pandemic.
The central banks would therefore have to "walk a fine line" in their monetary policy for the time being.
You would have to weigh the risk of inflation and financial risks against supporting the economic recovery, said IMF chief economist Gita Gopinath.
"Central banks should be prepared to act quickly if the dangers of rising inflation expectations become more tangible in this unprecedented recovery," wrote Gopinath.
According to its new economic forecast, the IMF expects an inflation rate of 2.8 percent this year and 2.3 percent next year for the industrialized countries.
In the previous forecast from July, the IMF was still forecasting 2.4 percent and 2.1 percent.