IMF revises down global growth projection to 5.9% for 2021

The International Monetary Fund (IMF) revised its global economic growth projection to 5.9% for 2021, down by 0.1 percentage point, according to a report issued on Tuesday.

Forecast for 2022 was kept stable at 4.9% compared to the previous update released in July, the IMF said in its World Economic Outlook.

Pointing to the pandemic-induced longer-than-expected supply shortages, the IMF said: "...Risks to economic prospects have increased, and policy trade-offs have become more complex."

It underlined that the economic outlook for the low-income developing country group has significantly weakened due to "worsening pandemic dynamics" while supply disruptions create more difficult near-term prospects for the advanced economy group.

Advanced economies are projected to grow 5.2% this year, revised down 0.4 percentage points from the previous report.

The IMF expected global growth would moderate to some 3.3% over the medium term (beyond 2022).

Advanced economy output is forecast to exceed pre-pandemic medium-term projections as possible policy support in the US may increase potential.

"By contrast, persistent output losses are anticipated for the emerging market and developing economy group due to slower vaccine rollouts and generally less policy support compared to advanced economies," it noted.

On rising inflation due to supply-demand mismatches and higher commodity prices, the IMF said price pressures are expected to subside next year.

The global organization raised the growth forecast for the Turkish economy to 9% from 5.8% for 2021, while it kept the projection at 3.3% for next year.

For the US economy, the IMF expects the growth rate to rise 1 percentage point to 6% for 2021. The GDP of the world's second-largest economy, China, is expected to increase by 8% this year, down 0.1 percentage points.

The fund's growth projection for the euro area was 5% in 2021 while it was 5.4% in the July report.