IMF Outlook on Global Growth

The International Monetary Fund (IMF) estimates that global growth will moderate and inflation will persist for longer.

For starters, global growth is projected at 5.9% in 2021 and is expected to moderate to 4.4% in 2022, down half a percentage point from the IMF’s October 2021 World Economic Outlook report.

The baseline incorporates the anticipated effects of mobility restrictions, border closures, and the health impacts of the spread of the Omicron variant.

These vary by country depending on the susceptibility of the population, the severity of mobility restrictions, the expected impact of infections on labor supply, and the importance of contact-intensive sectors.

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Above all, the IMF estimates that these impediments will affect growth in the first quarter of 2022.

The IMF also expects that the negative impact will disappear from the second quarter, assuming that the global increase in Omicron infections decreases and that the virus does not mutate into new variants that require greater mobility restrictions.

Forecasts are based on information through January 18, 2022.

Among changes in advanced economy forecasts for 2022, a revised assumption that removes the Build Back Better fiscal policy package from the baseline, the early withdrawal of monetary easing, and continued supply chain disruptions have contributed to a reduction of 1.2 percentage points for the United States.

Global Growth

In Canada, weaker data results towards the end of 2021 and weaker external demand anticipated for 2022 (related to the US revision) have led to a 0.8 percentage point downgrade.

In the Euro Zone, prolonged supply restrictions and disruptions from Covid-19 produced a less severe revision of 0.4 percentage points, led by a reduction of 0.8 percentage points for Germany, largely due to the economy’s exposure to supply chain crises.

Mobility restrictions imposed towards the end of 2021 are expected to weigh on growth in the euro area in early 2022.

In the UK, Omicron-related disruptions and supply constraints (particularly in labor and energy markets) mean growth is revised down 0.3 percentage point to 4.7 percent.


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