IMF tempers global growth forecast for 2022 on reduced prospects for U.S., China

peshkov/iStock via Getty Images

• The International Monetary Fund trims its global growth forecast for 2022 by 0.5 percentage point to 4.4% from its prior projection, mainly on reduced expectations for the U.S. and China.
• Continued supply disruptions, dimmer prospects for the rest of President Biden's Build Back Better fiscal agenda, and the Fed's withdrawal of extraordinary monetary accommodation weighs on the U.S. outlook, the IMF said.
• China's prospects, meanwhile, are tempered by a continued retrenchment of the real estate sector and weaker-than-expected recovery in consumption.
• Supply disruptions remain a constraint for other countries, too, such as Germany.
• For 2023, the IMF nudges up its global growth forecast to 3.8% from its prior view of 3.6%, reflecting the dissipation of some factors that currently creating drag.
• As with the U.S., inflation persists globally, affecting the IMF 2022 forecasts for advanced, emerging markets and developing countries.
• And the outlook highlights the divergence between advanced economies and the rest of the world. "While advanced economies are projected to return to pre-pandemic trend this year, several emerging markets and developing economies are projected to have sizeable output losses into the medium-term," the IMF report said.
• At the same time, record debt and rising inflation limit the ability of many countries to address renewed supply chain disruptions, it said.
• The IMF revises its 2022 inflation forecasts upward, with elevated price pressures expected to last for longer. Assuming inflation expectations remain anchored, inflation is expected to subside in 2023 on improved supply and demand gradually rebalancing to services from goods.
• Compare the performance of global and regional ETFs.
• Previously (Oct. 12), Global economic outlook dims for 2021 slightly, but divide widens, IMF says