IMF cuts growth forecasts for US, China and world as Omicron ...

The IMF downgraded China's forecast by 0.8 percentage point to 4.8% in 2022 after 8.1% growth in 2021, with growth to edge higher again to ... RegisternowforFREEunlimitedaccesstoReuters.comRegisterSummaryU.S.forecastfor2022cutby1.2percentagepointsEscalatingRussia-UkraineconflictcouldkeepinflationelevatedPandemicseencostingglobaleconomy$13.8trillionthrough2024WASHINGTON,Jan25(Reuters)-TheInternationalMonetaryFundlowereditseconomicforecastsfortheUnitedStates,ChinaandtheglobaleconomyonTuesday,andsaiduncertaintyaboutthepandemic,inflation,supplydisruptionsandU.S.monetarytighteningposedfurtherrisks."Weprojectglobalgrowththisyearat4.4%,0.5percentagepointlowerthanpreviouslyforecast,mainlybecauseofdowngradesfortheUnitedStatesandChina,"GitaGopinath,theIMF'sNo.2official,readfromherblog.TheIMFsaidtherapidspreadoftheOmicronvarianthadledtorenewedmobilityrestrictionsinmanycountriesandincreasedlaborshortages,whilesupplydisruptionswerecontinuingtofuelinflation.Omicronwasexpectedtoweighoneconomicactivityinthefirstquarter,buteaseupthereafter,giventhatitwasassociatedwithlesssevereillness,theIMFsaid.RegisternowforFREEunlimitedaccesstoReuters.comRegisterEscalatingconflictbetweenRussiaandUkrainecouldboostenergyprices,keepingheadlineinflationatelevatedlevelsforlonger,GopinathtoldreportersasthegloballenderupdateditsWorldEconomicOutlook.Globalgrowthisexpectedtoslowto3.8%in2023,a0.2percentage-pointuptickfromthepreviousforecastinOctober,theIMFsaid,addingtheincreasewaslargelymechanicalaftercurrentdragsongrowthdissipateinthesecondhalfof2022.Overall,thepandemicwasnowprojectedtoresultincumulativeeconomiclossesof$13.8trillionthrough2024,comparedtothepreviousforecastof$12.5trillion,Gopinath,whopreviouslyservedastheIMF'schiefeconomist,said.TheIMFcutitsforecastforU.S.growthby1.2percentagepointsgiventhefailureofU.S.PresidentJoeBidentopassamassivesocialandclimatespendingpackage,earliertighteningofU.S.monetarypolicyandcontinuedsupplyshortages.TheU.S.economyisnowforecasttogrowby4%in2022afterexpanding5.6%in2021,withgrowthseeneasingfurtherto2.6%in2023,theIMFsaid."Wearecertainlylivinginveryturbulenttimes,"Gopinathsaid,addingthattherewasstilla"tremendousuncertainty"abouthowmuchtheFederalReservewouldraiseinterestratesandoverwhatperiodoftime,aswellasrisinggeopoliticaltensionsaroundtheworld.Shesaidrisinginterestratesshouldaddressexuberanceinfinancialmarketsandusherin"amoreorderlycorrection"aslongastheFedcommunicatedclearlyaboutitspolicy.TheIMFdowngradedChina'sforecastby0.8percentagepointto4.8%in2022after8.1%growthin2021,withgrowthtoedgehigheragainto5.2%in2023.Syringeswithneedlesareseeninfrontofadisplayedstockgraphandwords"OmicronSARS-CoV-2"inthisillustrationtaken,November27,2021.REUTERS/DadoRuvic/Illustration/FilePhotoPandemic-induceddisruptionsrelatedtoChina'szero-toleranceCOVID-19policyandprotractedfinancialstressamongpropertydeveloperspromptedthedowngrade,theIMFsaid.TheIMFalsocutitsforecastfortheEuroareaby0.4percentagepointto3.9%in2022,andsaidgrowththerewouldslowto2.5%in2023.TheIMFcutby1.2percentagepointseachits2022growthforecastforBrazilandMexico,LatinAmerica'slargesteconomies.Brazilisnowseengrowing0.3%thisyearandMexico2.8%,whiletheregionisexpectedtogrow2.4%,0.6percentagepointbelowthepreviousforecast.readmoreIndiaandJapansawtheirforecastsupgradedsomewhat.TheIMFcautionedthattheemergenceofnewCOVID-19variantscouldprolongthepandemicandinducerenewedeconomicdisruptions,whilesupplychaindisruptions,energypricevolatility,andlocalizedwagepressuresposedfurtherrisks.Itrevisedupits2022inflationforecastsforbothadvancedanddevelopingeconomies,andsaidelevatedpricepressureswerelikelytopersistlongerthanpreviouslyforecastgivenongoingsupplychaindisruptionsandhighenergyprices.Itsaidinflationwasexpectedtoaverage3.9%inadvancedeconomiesand5.9%inemergingmarketanddevelopingeconomiesin2022beforesubsidingin2023,aidedbymoderatedgrowthinfuelandfoodpricesoverthatperiod.Whileeconomieswerecontinuingtorecoverfromtheshockofthepandemic,thepaceoftherecoverieswasdivergingwidelybetweenrichandpoorercountries,theIMFsaid.Whileadvancedeconomiesareprojectedtoreturntopre-pandemictrendthisyear,severalemergingmarketsanddevelopingeconomiesfacesizeableoutputlosses,theIMFsaid.Seventymillionmorepeoplewerelivinginextremepovertyafterthepandemic,settingbacktheprogressinpovertyreductionbyseveralyears,Gopinathwroteinherblog.TheIMFsaiditwascriticaltoensureworldwideaccesstovaccines,tests,andtreatmentstoreducetheriskoffurtherdangerousCOVID-19variants,whilemanycountrieswouldneedtoraiseinterestratestocurbinflationpressures.Gopinathnotedthat60%oflow-incomecountrieswerealreadyinorathighriskofdebtdistress,andurgedtheGroupof20tospeedupdebtrestructuringprocessesandsuspenddebtservicepaymentswhiletherestructuringsarebeingnegotiated.readmoreRegisternowforFREEunlimitedaccesstoReuters.comRegisterReportingbyAndreaShalalandDavidLawder;EditingbyAndreaRicciandLisaShumakerOurStandards:TheThomsonReutersTrustPrinciples.MorefromReutersGlobalInvestorSignuptoourinvestornewslettertogetthelatestnewsandtrendsinglobalfinancialmarkets.SignupDailyBriefingSubscribetoournewslettertogetallthenewsyouneedtostartyourday.Signup