IMF says trimming global growth forecast due to rising risks

WASHINGTON (AP) — The head of the International Monetary Fund says the agency is trimming its forecast for global growth this year.

IMF Managing Director Kristalina Georgieva on Tuesday cited rising risks from inflation, debt and a divergence in growth prospects between nations with access to coronavirus vaccines and those in need of shots.

In remarks prepared for a university audience in Italy, Georgieva said that the goal of the annual meetings next week of the 190-nation IMF and its sister lending agency, the World Bank, will be to address the growing risks in a coordinated way to improve the global economy’s outlook.

She noted that the IMF’s World Economic Outlook in July had projected a solid global rebound of 6%, which would have represented a dramatic rebound from a 3.2% contraction in the pandemic year of 2020.

But now, she said, IMF forecasters are a bit less optimistic following surges in delta variant cases over the summer in many parts of the world and stronger-than-expected inflation exacerbated by problems with global supply chains.

“The risks and obstacles to a balanced global recovery have become even more pronounced,” Georgieva said in a scheduled virtual appearance at Bocconi University in Milan. She said the specific results of the lowered outlook would be released by the IMF next Tuesday.

She said there is a danger that higher-than-expected inflation could cause central banks to raise interest rates and depress growth even more. Rising food prices are a particular concern, she said, with global prices up 30% over the past year, while higher energy prices are also putting pressure on families.

“The United States and China remain vital engines of growth even as their momentum is now slowing,” Georgieva said, adding that a few other advanced and...