More than half of inflation-targeting EMDEs experienced above-target inflation in 2021, prompting central banks to increase policy rates. The rebound in global activity, together with supply disruptions and higher food and energy prices, have pushed up headline inflation across many countries. Note: Figure shows the Consensus forecast for median headline CPI inflation for 2021-22 based on December 2021 and May 2021 surveys of 32 advanced economies and 50 EMDEs. After surprising to the upside in 2021, global inflation is expected to remain elevated this year In contrast to advanced economies, most EMDEs are expected to suffer substantial scarring to output from the pandemic, with growth trajectories not strong enough to return investment or output to pre-pandemic trends over the forecast horizon of 2022-23.ģ. dollar GDP weights at average 2010-19 prices and market exchange rates. Aggregates are calculated using real U.S. For 2023, the January 2020 baseline is extended using projected growth for 2022. Figure shows the percent deviation between the latest projections and forecasts released in the January 2020 edition of the Global Economic Prospects report. Note: EMDEs = emerging market and developing economies. EMDEs are projected to experience a weaker recovery than advanced economiesĭeviation of output from pre-pandemic trends Much of the global slowdown over the forecast horizon is accounted for by major economies, which will also weigh on demand in emerging market and developing economies (EMDEs). Global growth is set to slow sharply, as the initial rebound in consumption and investment fades and macroeconomic support is withdrawn. Note: Figure shows the contribution to global growth forecasts over 2021-23, while the first bar shows the average contribution to growth in the 2015-19 period. Global growth is projected to decelerate in 20Ĭontributions of major economies to global growth This underscores the importance of strengthening global cooperation to foster rapid and equitable vaccine distribution, calibrate health and economic policies, enhance debt sustainability in the poorest countries, and tackle the mounting costs of climate change.ġ. Because EMDEs have limited policy space to provide additional support if needed, these downside risks heighten the possibility of a hard landing. Various downside risks cloud the outlook, including simultaneous Omicron-driven economic disruptions, further supply bottlenecks, a de-anchoring of inflation expectations, financial stress, climate-related disasters, and a weakening of long-term growth drivers. After rebounding to an estimated 5.5 percent in 2021, global growth is expected to decelerate markedly in 2022-to 4.1 percent, reflecting continued COVID-19 flare-ups, diminished fiscal support, and lingering supply bottlenecks.Īlthough output and investment in advanced economies are projected to return to pre-pandemic trends next year, they will remain below in emerging market and developing economies (EMDEs), owing to lower vaccination rates, tighter fiscal and monetary policies, and more persistent scarring from the pandemic.
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