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IMF Lowers Economic Growth Citing Supply Chain Disruption

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The International Monetary Fund slashed global growth projections and raised outlook for inflation risk if supply chain disruptions persist into 2022

The International Monetary Fund has slashed growth projections for the global economy, citing supply chain disruption and international healthcare reverberations from the pandemic.

In its most recent World Economic Outlook report, titled Recovery During a Pandemic, Health Concerns, Supply Disruptions and Price Pressures, the IMF forecast global economy growth of 5.9% in 2021 (0.1% lower than projected in July) with 2022 holding steady at 4.9%. IMF economists said the revision reflected “a downgrade in advanced economies – in part due to supply disruptions”, and “worsening pandemic dynamics” in low-income developing countries.

The report also considered shortages and other supply-demand dynamics that impacted the flow of key manufacturing components, such as semiconductor chips, as well as core shipping assets including shipping containers which “became highly distorted during the pandemic, leaving many stranded off their usual routes”. Such supply bottlenecks are key contributors to the risk of inflation, and the uncertainty that surrounds it.

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