The International Monetary Fund is slightly downgrading its outlook for the global recovery from the pandemic recession, reflecting the persistence of supply chain disruptions in industrialized countries and deadly disparities in vaccination rates between rich and poor nations.
In its latest World Economic Outlook being released Tuesday, the IMF foresees global growth this year of 5.9 per cent, compared with its projection in July of 6 per cent.
For the United Sates, the world’s largest economy, the IMF predicts growth of 6 per cent for 2021, below its July forecast of 7 per cent. The downward revision reflects a slowdown in economic activity resulting from a rise in Covid-19 cases and delayed production caused by supply shortages and a resulting acceleration of inflation.
The IMF predicts that for the world’s advanced economies as a whole, growth will amount to 5.2 per cent this year, compared with a meager predicted gain of 3 per cent for low-income developing countries.
The dangerous divergence in economic prospects across countries,” the IMF said, remains a major concern.
The monetary fund expects the total output from advanced economies to recoup the losses they suffered during the pandemic by 2022 and to exceed their pre-pandemic growth path by 2024.
But in emerging and developing countries outside of China, the IMF warns, output will remain an estimated 5.5 per cent below the output growth path that the IMF had been forecasting before the pandemic struck in March of last year. That downgrade poses a serious threat to living standards in those countries, the monetary fund said.
The IMF attributed that economic divergence to the sizable disparities in vaccine access between wealthy and low income countries. It said the outlook for poorer countries had darkened considerably, reflecting the surge in cases of the delta variant that has elevated the Covid death toll worldwide to nearly 5 million.
While nearly 60 per cent of the population in advanced economies are fully vaccinated, only about 4 per cent of the population in the poorer countries are.
Along with lagging vaccination levels, poorer nations face headwinds from a spike in inflation, with food prices rising the most in low-income countries, the IMF said.