The IMF has downgraded its global growth forecast slightly to 5.9% for this year in its World Economic Outlook, warning that ongoing pandemic is widening divergence between countries with access to adequate supplies of vaccine and those without.
“The global recovery continues but the momentum has weakened, hobbled by the pandemic. Fueled by the highly transmissible Delta variant, you will recall that the global COVID‑19 death‑toll has risen close to 5 million and risks abound, holding back a full return to normalcy. Pandemic outbreaks and critical links of global supply chains have resulted in longer‑than‑expected supply disruptions, feeding inflation in many countries,” said Gopinath.
The COVID-19 pandemic has caused a rise in debt, while also causing disruptions to global supply chains which has led to inflationary pressure especially on food and fuel, IMF chief economist Gita Gopinath said Tuesday (October 12) as the organization’s Annual Meetings kicked off in Washington.
“On the one hand, pandemic outbreaks and climate disruptions have resulted in shortages of key inputs and lowered manufacturing activity in several countries. On the other hand, these supply shortages, alongside the release of pent‑up demand and the rebound in commodity prices, have caused consumer price inflation to increase rapidly in many countries,” Gopinath added at virtual news conference.
Gopinath re-asserted that the IMF researchers do not play politics with their work, following reports that its current Managing Director may have improperly applied pressure to change findings in a key report while overseeing it at the World Bank.
IMF Managing Director Kristalina Georgieva received full and unanimous support by the Executive Board on Monday night which she claimed that exonerated her of any wrongdoing.
“In the case of the IMF, we take data integrity incredibly seriously, which is why we have many processes in place to make sure that our data and focus are completely reviewed carefully by multiple departments and multiple economists. As always, with any institution, including the IMF, we are constantly working to ensure the highest standards for our data and for our research and our analytical work. As a part of that, we have ongoing reviews all the time, and we will continue to do so,” Gopinath assured.
Finally, the US received a downgrade for its growth prospects and Gopinath was asked about the ongoing political infighting on Capitol Hill about the debt ceiling.
“It is, I would say, highly unproductive to have the situation of brinkmanship with respect to the U.S. debt ceiling. And a point that we have been making for a while now is to have a more longer‑term solution to it, and that can be done by replacing the debt ceiling with some kind of medium‑term fiscal target as opposed to the debt ceiling, or automatically raising the debt ceiling to be in line with whatever it is in terms of taxes and appropriations that Congress has approved so it happens automatically,” Gopinath warned.
Read the full report here: https://www.imf.org/en/Publications/WEO