The International Monetary Fund (IMF) on Tuesday raised the global growth forecast for next year, projecting growth to be driven largely by the expansion in the advanced economies, while emerging and developing economies are set to have modest gains.
The global growth forecast for 2022 was raised to 4.9 per cent from 4.4 per cent, the IMF said in an update to its quarterly World Economic Forecast.
More than a year after the coronavirus emerged, economic fortunes are closely tied to how successful governments have been at providing fiscal support and acquiring and administering vaccines to their respective citizens.
The global lender said that about 40 per cent of the population in advanced economies had been fully vaccinated, while that figure is just 11 per cent or less in emerging markets and low-income developing economies.
Meanwhile in the US, the Federal Reserve’s policy-setting committee, the Federal Open Market Committee, concluded its two-day monetary policy meeting on Wednesday, leaving the target range for its federal funds rate unchanged at zero to 0.25 per cent, and said it will continue with its $120 billion-a-month bond-buying programme. The move was in line with expectations.
The Fed still believes that the economy is on track to meet the tapering goals, despite inflation rising above its target.
Fed chair Jerome Powell still has confidence that inflation will fall in the medium-term, and specifically stated that he felt there was no need to raise interest rates yet. However, the Fed still sees risks to the economic outlook.
Finally, German consumer sentiment held steady heading into August as shoppers became more eager to spend, but took a cautious view on the economic outlook than a month earlier on worries about rising COVID-19 cases, a survey showed on Wednesday.
The forward-looking GfK consumer sentiment index was unchanged at -0.3 in August. Economists had forecast the index to improve to +1.0.
Rolf Bürkl, GfK consumer expert said the dynamism of vaccination has lately decreased significantly despite the availability of sufficient vaccines. This is currently preventing a further significant rise in consumer sentiment.
This report was compiled by Bank of Valletta for general information purposes only.