WASHINGTON: The International Monetary Fund lowered its economic forecasts for the United States, China and the global economy on Tuesday, and said uncertainty about the pandemic, inflation, supply disruptions and US monetary tightening posed further risks.
"We project global growth this year at 4.4%, 0.5 percentage point lower than previously forecast, mainly because of downgrades for the United States and China," Gita Gopinath, the IMF's No. 2 official, wrote in a blog on the latest update of the World Economic Outlook.
The IMF said the rapid spread of the Omicron variant had led to renewed mobility restrictions in many countries and increased labor shortages, while supply disruptions were fueling inflation. Omicron was expected to weigh on economic activity in the first quarter, but ease up thereafter, given that it was associated with less severe illness, the IMF said.
Global growth is expected to slow to 3.8% in 2023, a 0.2 percentage-point uptick from the previous forecast in October, the IMF said, but it said the increase was largely mechanical after current drags on growth dissipate in the second half of 2022.
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Overall, the pandemic was now projected to result in cumulative economic losses of $13.8 trillion through 2024, compared to the previous forecast of $12.5 trillion, Gopinath, who previously served as the IMF's chief economist, wrote.
The IMF cut its forecast for US growth by 1.2 percentage points given the failure of US President Joe Biden to pass a massive social and climate spending package, earlier tightening of US monetary policy and continued supply shortages.
The US economy is now forecast to grow by 4% in 2022 after expanding 5.6% IN 2021, with growth seen easing further to 2.6% in 2023, the IMF said.
It downgraded China's forecast by 0.8 percentage point to 4.8% in 2022 after 8.1% growth in 2021, with growth to edge higher again to 5.2% in 2023.
Pandemic-induced disruptions related to China's zero-tolerance COVID-19 policy and protracted financial stress among property developers prompted the downgrade, the IMF said.
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The IMF also cut its forecast for the Euro area by 0.4 percentage point to 3.9% in 2022, and said growth there would slow to 2.5% in 2023.