The global economic recovery from the coronavirus pandemic is slowing and the risks of more health problems are increasing, the International Monetary Fund warned Tuesday.
The IMF trimmed its 2021 growth forecast for the United States, the world's biggest economy, by a full percentage point to 6%, the most for any of the G-7 economies of some of the world's biggest industrialized nations.
The cut for U.S. growth reflected disruptions in the supply chain of consumer goods arriving from foreign ports, the IMF said, and slowing consumer spending, which accounts for 70% of the U.S. economy.
Overall, the IMF predicted that the world economy would advance 5.9% this year, down a tenth of a percentage point from its July projection. Its 2022 forecast for 4.9% growth remained unchanged.
The IMF said that rapid spread of the delta variant of the coronavirus and "the threat of new variants has increased uncertainty about how quickly the pandemic can be overcome."
"Policy choices have become more difficult, confronting multidimensional challenges — subdued employment growth, rising inflation, food insecurity, the setback to human capital accumulation, and climate change — with limited room to maneuver," the IMF said.
In addition to the U.S., the organization also cut its 2021 growth forecasts for China, Japan and Germany, the world's next three biggest economies.
The IMF said that shortages of materials for manufacturing were hurting growth in Germany, while restrictions to control the coronavirus outbreak in Japan were limiting its economic recovery. The agency predicted China to grow 8% this year, but said "large-scale, disorderly corporate debt defaults," including in its real estate sector, could pose a further risk.
The IMF said supply chain bottlenecks have led to a shortage of an array of products throughout the world and have caused a steep increase in shipping costs, in turn boosting the cost of consumer goods.
It also warned that a failure by the U.S. government to lift its long-term debt ceiling, now likely extended only into early December, could have "serious implications for financial markets."
IMF's chief economist, Gita Gopinath, said labor markets in developing economies have been hit hardest by the pandemic. She said the large disparity in vaccine access and government support between richer and poorer countries is creating a "dangerous divergence in economic prospects."
"The outlook for the low-income developing country group has darkened considerably due to worsening pandemic dynamics," she warned.
The IMF said that while nearly 60% of people in advanced economies are fully vaccinated, and some are now receiving booster shots, about 96% of the people in low-income countries remain unvaccinated.
As a result, the IMF said advanced economies are expected by next year to return to pre-pandemic projections for economic growth, while developing economies could remain 5.5% below pre-pandemic forecasts into 2024.