Economists believe that supply risks driving shortage-driven inflation could persist, weakening expectations.
Linda Yueh, economist, broadcaster, and an adjunct professor of economics at London Business School, and a fellow in economics at St Edmund Hall, Oxford University, shared an article on the International Monetary Fund (IMF) seeing inflation subsiding in 2022, with supply-related risks keeping it elevated till this fall.
The IMF has predicted headline inflation to peak at 3.6% in the fall of 2021 for advanced economies. However, it is expected to decline to about 2% by mid-2022. Meanwhile, emerging and developing economies will see inflation peak at 6.8% this fall and will decline to 4% next year. Inflation is expected to remain longer due to soaring housing prices and supply shortages experienced by advanced and developing countries. Additionally, currency depreciations and continued food price pressures are also driving inflation post pandemic.
The IMF report reported a 40% increase in worldwide food prices in low-income countries since the Covid-19 outbreak, while wages surged in hospitality, retail, and leisure sectors across advanced economies including the US.
1/ IMF says headline consumer price inflation should peak this fall & recede to pre-pandemic levels by mid-2022, but risks remain that shortage-driven inflation spikes could prove more persistent, unanchoring expectations. https://t.co/uncEQqWqa1
— Linda Yueh (@lindayueh) October 6, 2021
Christophe Barraud, chief economist and strategist at Market Securities, shared an article on the IMF trimming its global economic growth forecast of 2021 to slightly below its earlier July estimate of 6%, citing risks related to the vaccine divide, inflation, rising debt burdens, and divergent economic trends that have arisen because of the Covid-19 pandemic.
Managing director of the IMF, Kristalina Georgieva, believes that the world economy is gradually recovering from the pandemic, but is being limited by many factors such as the Great Vaccination Divide, which has left many low-income and developing economies with little access to coronavirus vaccines. Consequently, advanced economies are expected to return to pre-pandemic outputs by 2022, but it may several years for most emerging and developing countries to achieve the same.
Rising debts, surging food prices, and the lack of Covid-19 vaccines are the greatest challenges being faced by developing economies. Eric LeCompte, executive director of the religious development group Jubilee USA Network, believes that the economic losses can run into trillions if effective Covid-19 vaccines do not reach the worldwide community and especially the developing countries.
Georgieva has urged richer nations to accelerate the supply of Covid-19 vaccines to developing nations, remove trade restrictions, and offer more funding to provide Covid-19 testing, tracing, and therapeutics. According to the Our World in Data at the University of Oxford, approximately 46% of the world population has been vaccinated with at least one dose of a Covid-19 vaccine, while only 2.3% have been inoculated in low-income countries.
🌎 As expected (https://t.co/abdZC20DTg) ⬇
IMF trims 2021 GDP forecast, citing 'vaccine divide,' inflation – Reutershttps://t.co/HpzUS1aGq1
— Christophe Barraud🛢 (@C_Barraud) October 6, 2021
Daniel Lacalle, chief economist and investment officer at Tressis Gestión, shared an article on an estimated 200,000 French unions across more than 200 cities and towns protesting against economic austerity in the country after unions called the first nationwide strike since the Covid-19 outbreak.
The unions have been accusing the French politicians and bosses for manipulating the Covid-19 health crisis to force through more far-fight economic austerity policies. Deep unemployment insurance cuts have been brought into effect despite the economic and Covid-19 uncertainty. As a result, the lower- and middle-class households have been subject to meagre living standards, surges in inequality, rising fuel prices, Covid-19 related restrictions and unemployment.
Protesters argue say that the reality of coronavirus lockdowns and work cutbacks has been disastrous for many average households, as against the perception that they are welcomed as generously subsidised vacation.
France government spending to GDP: 55%. Calling this "austerity" is like calling Abba a heavy metal band.
French unions decry austerity in first strike since Covid-19 outbreakhttps://t.co/4VqbeuyOBN
— Daniel Lacalle (@dlacalle_IA) October 6, 2021