Surging inflation and supply chain disruptions are hampering the global economic recovery from the coronavirus pandemic, the International Monetary Fund warned on Tuesday.
The Washington-based IMF projected in its latest World Economic Outlook that global domestic gross product will grow by 5.9% this – 0.1 percentage point lower than its July estimate. The IMF expects global growth to remain at 4.9% next year.
“Pandemic outbreaks in critical links of global supply chains have resulted in longer than expected supply disruptions, feeding inflation in many countries,” Gita Gopinath, chief economist at the IMF, wrote in an accompanying blog. “Overall, risks to economic prospects have increased and policy trade-offs have become more complex.”
The supply disruption drag on GDP is even more pronounced in advanced economies, the IMF said – including the U.S. The organization slashed its growth estimates for the U.S. to 6%, down a full percentage point from July. It marked the biggest reduction suffered by any G7 nation. The IMF also reduced its growth outlooks for both Spain and Germany by 0.5 percentage points and decreased Canada’s by 0.6 percentage points.
