This setback was mainly caused by the faltering of the two largest engines of the global economy, the United States and China. Americans can be happy with 4 percent growth this year. This is 1.2 percentage points lower than what the IMF initially saw as a crystal ball.
The fund is more bleak about the United States because President Joe Biden has failed to get a large package of social measures and climate plans through Congress. The tightening of monetary policy in the country is also hampering growth, as is the persistent shortage of products and raw materials.
The outlook for China is 0.8 percentage point lower than it was a few months ago. The Chinese will now have to settle for 4.8 percent growth, after the 8.1 percent they saw last year.
The International Monetary Fund expects the euro zone to grow by 3.9 percent this year, 0.4 percentage points lower than its previous forecast. This time the fund did not have a separate outlook for the Netherlands. In December, researchers from ING Research forecast 3.6% growth, after the economy grew by 4.4% in 2021.
The International Monetary Fund says that the emergence of new variables prolongs the duration of the epidemic and may dampen the economic recovery. Suspended supply lines and rising energy prices have driven up inflation this year. It will fall again next year, buoyed by a smaller rise in food and fuel prices.
The head of the International Monetary Fund, Kristalina Georgieva, said last week that the pandemic bill would rise to $12.5 trillion by 2024. Poverty alleviation efforts have also been set back years. After the pandemic, 70 million people live in extreme poverty.
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