🌐 IMF Revises Global Growth Lower to 4.4% in 2022, Expects 3.8% in 2023

IMF's January WEO revised global growth lower by 1/2 a percentage point to 4.4% for 2022. The U.S. economic growth forecast for 2022 was downgraded by 1.2pp, China was revised lower by 0.1pp, these economies are seen expanding by 4.0% and 4.8%, respectively. IMF said that a continuation of supply chain disruptions, removal of the Build Back Better fiscal policy package from the baseline, and policy tightening from the Fed are reflected in their growth assumption. Also, the IMF expects inflation to persist for longer than what was expected in the previous WEO, they added this should gradually decrease as supply-demand imbalances ease in 2022 and monetary policy is adjusted.

Risks to the IMF outlook are new Covid-19 variants, supply chain disruptions, energy price volatility, and wage pressures filtering into inflation and monetary policy paths. Also, as central banks adjust their stance towards high inflation, this could pose risks to financial stability and emerging markets' capital flows. The IMF also listed climate and geopolitical tensions as global risks.