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IMF lowers 2021 growth forecast, COVID-19 recovery for global, U.S. economies

By Jake Thomas
IMF lowers 2021 growth forecast, COVID-19 recovery for global, U.S. economies
Traders are seen on the floor of the New York Stock Exchange on Wall Street in New York City on October 6. Tuesday's forecast said a key factor in its revised outlook is the persistence of the Delta coronavirus variant and its effects on world economies.  Photo by John Angelillo/UPI | License Photo

Oct. 12 (UPI) -- The International Monetary Fund on Tuesday revised its near-term outlook and predicted a slightly weaker global economic recovery from COVID-19 -- mainly due to supply chain disruptions and pressures of higher inflation.

The IMF forecast projected growth figures for many nations, including the United States, through the remainder of 2021. One of the key factors in the revised outlook, it said, is the persistence of the Delta coronavirus variant and its effects on world economies.

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For the rest of this year, the outlook projects global growth of 5.9% -- a slight decline from its previous forecast of 6%.

For the U.S. economy, the IMF now projects growth of 6% for 2021, which is off from the 7% it anticipated in July.

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For advanced economies, the forecast expects a decrease from 5.6% to 5.2%.

"Rapid spread of Delta and the threat of new variants have increased uncertainty about how quickly the pandemic can be overcome," the IMF said in its forecast. "Policy choices have become more difficult, with limited room to maneuver."

The IMF also said supply chain disruptions in advanced economies and worsening pandemic conditions in low-income, lower-vaccinated countries are factors in the downgraded outlook. The decline, it noted, was partly offset by growth in some commodity-exporting developing economies.

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China's economy, the world's second-largest, is now expected to grow over 2021 at 8%, down 0.1 point from July.

In its outlook for 2022, the IMF said it expects global growth to level out at about 3.3%. Advanced economies are expected to surpass prepandemic growth and U.S. inflation to subside. Poorer countries will see a slower recovery, due to vaccine and inflationary challenges.

"However, great uncertainty surrounds inflation prospects-primarily stemming from the path of the pandemic, the duration of supply disruptions, and how inflation expectations may evolve in this environment," the forecast added, warning that central banks may need to intervene if prices continue to increase.

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The IMF called for hastening global vaccination, widespread testing and development of other treatments.

"This would save millions of lives, help prevent the emergence of new variants, and hasten the global economic recovery," the IMF said.

Tuesday's forecast said U.S. growth could possibly decrease further due to $4 trillion worth of government spending on the bipartisan infrastructure package and President Joe Biden's social spending proposal. Both measures are still being addressed by Congress.

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