The IMF maintains its global growth forecast of 6% in 2021 and 4.9%in 2022.
The 2021 global forecast is unchanged from IMF’s April 2021 World Economic Outllook but with offsetting revisions, the fund noted, adding that differences in recovery among economies grow more uneven.
While prospects for emerging market and developing economies have been marked down for 2021, especially for Emerging Asia, the forecast for advanced economies is revised up, IMF said, adding that these revisions reflect pandemic developments and changes in policy support.
The 0.5 percentage-point upgrade for 2022 derives largely from the forecast upgrade for advanced economies, particularly the US, reflecting the anticipated legislation of additional fiscal support in the second half of 2021 and improved health metrics more broadly across the group, IMF pointed out.
Recent price pressures for the most part reflect unusual pandemic-related developments and transitory supply-demand mismatches, the fund observed.
Inflation is expected to return to its pre-pandemic ranges in most countries in 2022 once these disturbances work their way through prices, though uncertainty remains high, IMF said.
Central banks should generally look through transitory inflation pressures and avoid tightening until there is more clarity on underlying price dynamics, IMF advised.