By Tom Burnett CFA
On January 25, 2022, the International Monetary Fund (“IMF”) issued its latest projections for global economic growth. The overall tone of the new report is negative and the new forecasts reflect the ongoing outbreak of the Covid-19 variants and the rising prospects for inflation.
The global GDP outlook now calls for 2022 growth of 4.4%, down from a forecast of 4.9% in the October 2021 forecast. The comparable figures for 2020 and 2021 were negative 3.1% and positive 5.9% respectively. Inflation is now expected to average 3.9% in the Advanced Economies and 5.9% in the Emerging Economies over the 2022 calendar year. Inflation is then expected to subside in 2023.
The U.S. economy is now forecast to grow 4.0% in 2022, well below the 5.2% rate projected in the October 2021 Report. The growth in 2021 was 5.0% after the Covid-induced recession in 2020 where GDP actually fell by 3.4%. For 2023, the U.S. economy is now expected to grow by just 2.6%
The latest Report sees the Euro area GDP growth coming in at 3.9% for 2022, down from an estimate of 4.3% in the October 2021 Report. In 2023, the Euro region is now expected to grow at a modest 2.5% rate.
The IMF now expects China to report growth of 4.8% in 2022, down from a 5.2% projection in the October Report. Growth of 5.2% is now forecast for China in 2023.
World trade is now forecast to grow at 6.0% in 2022, down from an estimate of 6.7% in the October Report. Growth of 4.9% is now forecast for 2023.
Tom Burnett CFA is Director of Research