The International Monetary Fund expects global economic growth to decline to 4.4% in 2022
The slowdown in the United States and China is holding back global growth
Countries affected by supply chain throttling due to the “Covid-19” outbreak.
From the source
A new report from the International Monetary Fund warned that the slowdown in the world's two largest economies, the United States and China, may be greater than expected this year, which could lead to a decline in production and hinder global growth.
And the Fund revealed in its latest report that “the global economy enters 2022 in a weaker position than previously expected,” as rich and poor countries alike around the world were affected by high inflation rates, and the supply chain suffocation due to the outbreak of the “Covid-19” pandemic. and related shutdowns and labor shortages.
The Fund indicated that the main reason for the decline in growth is the drop in estimates of the global growth rate to 4.4% from 4.9%, which it expected only three months ago, due to developments in the two economic giants, according to the American newspaper “New York Times”.
undo factors
In the United States, the Fund said the failure to pass President Joe Biden's $2.2 trillion comprehensive infrastructure and social policy package and the Federal Reserve's tighter monetary policy were among the reasons it lowered the US growth forecast by 1.2 points. percentage to 4%.
In China, which has boosted a lot of global growth in recent years, the fund pointed to the collapse of the real estate sector and the “zero Covid” policy implemented by China, which restricted travel, closed companies and reduced consumption, as well as lowering the country’s growth forecast by 0.8 percentage points to 4.8 %.
uncertainty
The Fund stressed that the expectations were subject to a high level of uncertainty, especially about the course of the Corona pandemic, climate-related natural disasters, supply chain disruptions, and increasing political tensions.
But as the pandemic enters its third year, pessimism may emerge from behind the forecast.
The lackluster economic prospects come at a time when governments have fewer opportunities to know how to spend their money, as debt levels have risen over the past two years, countries have grappled with the health crisis caused by the pandemic, and aid has been directed to their citizens.
But public spending is unlikely to reach the same levels in the future.
Prices and interest
At the same time, prices are rising, especially food and fuel, and inflation fears are driving up interest rates, as central banks look for ways to discourage people from borrowing money to buy a car, or invest in businesses, and increase demand for products in short supply.
However, creeping interest rates not only risk slowing economic growth, but also burden poor countries with greater debt in the future.
“Despite the difficulty of recovery in the richer countries, emerging economies have been hardest hit by weak growth,” said First Deputy Managing Director of the International Monetary Fund, Gita Gopinath, noting that there are about 70 million people living in extreme poverty more than before. before the outbreak of the pandemic.
constant threat
The threat from the pandemic, represented by a new, more lethal mutated omicron, continues, but the International Monetary Fund expects the rate of hospitalizations and deaths from the virus to decline to low levels by the end of 2022.
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