London Daily

Focus on the big picture.
Tuesday, Oct 07, 2025

Recovery disrupted: IMF cuts global economic growth forecast

Recovery disrupted: IMF cuts global economic growth forecast

Cut to global forecast largely reflects downward revisions to US and China outlooks.

The global economy is entering 2022 “in a weaker position than previously expected,” the International Monetary Fund warned on Tuesday, as it downgraded its global growth outlook largely due to clouds gathering over the recoveries in the United States and China.

The IMF’s latest World Economic Outlook calls for the global growth to downshift from 5.9 percent in 2021 to 4.4 percent this year. The 2022 forecast is half a percentage point lower than the Fund’s October outlook and largely reflects forecast markdowns for the world’s two largest economies.

The Fund saw the US economy growing 4.0 percent this year. That was 1.2 percentage points lower than its October call and reflected the failure to pass President Joe Biden’s Build Back Better spending plan, the Federal Reserve’s unwinding of pandemic stimulus measures, and continuing supply shortages that are driving inflation.

The IMF sees China’s economy growing 4.8 percent this year – 0.8 percentage points lower than its October forecast – thanks to the country’s business-sapping, zero-tolerance COVID-19 policy, and ongoing stress in its heavily indebted property sector.

Inflation, risks, and bright spots


Inflation has proven to be more persistent than the IMF bargained for back in October, thanks to continuing supply chain disruptions and high energy prices. The Fund sees those persisting this year, but gradually decreasing if inflation expectations remain anchored, “supply-demand imbalances wane in 2022” and central banks like the US Federal Reserve raise borrowing costs to rein in rising prices.

But as always, there are risks to the outlook, said the IMF, such as new COVID-19 variants that could prolong the pandemic and introduce fresh economic disruptions. Supply chain snarls, volatile energy prices, and localised wage pressures could create more uncertainty around inflation, said the Fund, while interest rate increases in advanced economies such as the US could negatively affect emerging and developing economies.

“Rising geopolitical tensions and social unrest also pose risks to the outlook,” IMF First Deputy Managing Director Gita Gopinath told reporters during a virtual news conference on Tuesday.

Gopinath said that total economic losses from the pandemic are expected to be close to $13.8 trillion through 2024. She also highlighted a recurring theme the Fund has raised since the global economy started its long slog back to pre-pandemic health, namely the widening recovery gap between richer and poorer nations.

“Even as recoveries continue, the troubling divergence in prospects across countries persists,” said Gopinath, noting that advanced economies are expected to return to their pre-pandemic trends this year, while several emerging markets and developing economies “are projected to have sizeable output losses into the medium term.”

The IMF downgraded its outlook for Brazil and Mexico, Latin America’s biggest economies, as well as South Africa.

While the overall trend for the globe is a recovery downshift, the IMF upgraded the outlook for India. It also sees the Middle East and North Africa getting a performance boost this year from higher energy prices.

“The MENA region is one where we actually have an upgrade for this year, so we’re expecting growth to be 4.4 which is an upgrade of point three,” Petya Koeva Brooks, deputy director at the IMF’s research department told reporters. “The main reason for that is the improved prospects for growth in oil exporters, which is again linked directly to the higher oil prices.”

Newsletter

Related Articles

0:00
0:00
Close
France: Less Than a Month After His Appointment, the New French Prime Minister Resigns
Hungarian Prime Minister Viktor Orbán stated that Hungary will not adopt the euro because the European Union is falling apart.
Sarah Mullally Becomes First Woman Appointed Archbishop of Canterbury
Mayor in western Germany in intensive care after stabbing
Australian government pays Deloitte nearly half a million dollars for a report built on fabricated quotes, fake citations, and AI-generated nonsense.
US Prosecutors Gained Legal Approval to Hack Telegram Servers
Macron Faces Intensifying Pressure to Resign or Trigger New Elections Amid France’s Political Turmoil
Standard Chartered Names Roberto Hoornweg as Sole Head of Corporate & Investment Banking
UK Asylum Housing Firm Faces Backlash Over £187 Million Profits and Poor Living Conditions
UK Police Crack Major Gang in Smuggling of up to 40,000 Stolen Phones to China
BYD’s UK Sales Soar Nearly Nine-Fold, Making Britain Its Biggest Market Outside China
Trump Proposes Farm Bailout from Tariff Revenues Amid Backlash from Other Industries
FIFA Accuses Malaysia of Forging Citizenship Documents, Suspends Seven Footballers
Latvia to Bar Tourist and Occasional Buses to Russia and Belarus Until 2026
A Dollar Coin Featuring Trump’s Portrait Expected to Be Issued Next Year
Australia Orders X to Block Murder Videos, Citing Online Safety and Public Exposure
Three Scientists Awarded Nobel Prize in Medicine for Discovery of Immune Self-Tolerance Mechanism
OpenAI and AMD Forge Landmark AI-Chip Alliance with Equity Option
Munich Airport Reopens After Second Drone Shutdown
France Names New Government Amid Political Crisis
Trump Stands Firm in Shutdown Showdown and Declares War on Drug Cartels — Turning Crisis into Opportunity
Surge of U.S. Billionaires Transforms London’s Peninsula Apartments into Ultra-Luxury Stronghold
Pro Europe and Anti-War Babiš Poised to Return to Power After Czech Parliamentary Vote
Jeff Bezos Calls AI Surge a ‘Good’ Bubble, Urges Focus on Lasting Innovation
Japan’s Ruling Party Chooses Sanae Takaichi, Clearing Path to First Female Prime Minister
Sean ‘Diddy’ Combs Sentenced to Fifty Months in Prison Following Prostitution Conviction
Taylor Swift’s ‘Showgirl’ Launch Extends Billion-Dollar Empire
Trump Administration Launches “TrumpRx” Plan to Enable Direct Drug Sales at Deep Discounts
Trump Announces Intention to Impose 100 Percent Tariff on Foreign-Made Films
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Singapore and Hong Kong Vie to Dominate Asia’s Rising Gold Trade
Trump Organization Teams with Saudi Developer on $1 Billion Trump Plaza in Jeddah
Manhattan Sees Surge in Office-to-Housing Conversions, Highest Since 2008
Switzerland and U.S. Issue Joint Assurance Against Currency Manipulation
Electronic Arts to Be Taken Private in Historic $55 Billion Buyout
Thomas Jacob Sanford Named as Suspect in Deadly Michigan Church Shooting and Arson
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
New York Man Arrested After On-Air Confession to 2017 Parents’ Murders
U.S. Defense Chief Orders Sudden Summit of Hundreds of Generals and Admirals
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
Trump Claims FBI Planted 274 Agents at Capitol Riot, Citing Unverified Reports
India: Internet Suspended in Bareilly Amid Communal Clashes Between Muslims and Hindus
Supreme Court Extends Freeze on Nearly $5 Billion in U.S. Foreign Aid at Trump’s Request
Archaeologists Recover Statues and Temples from 2,000-Year-Old Sunken City off Alexandria
China Deploys 2,000 Workers to Spain to Build Major EV Battery Factory, Raising European Dependence
Speed Takes Over: How Drive-Through Coffee Chains Are Rewriting U.S. Coffee Culture
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Ringo Starr Champions Enduring Beatles Legacy While Debuting Las Vegas Art Show
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Colombian President Petro Vows to Mobilize Volunteers for Gaza and Joins List of Fighters
×