IMF trims global GDP growth forecast to below 6%: Economic wrap

RIYADH/CAIRO: The International Monetary Fund on Tuesday revised its global GDP growth forecast to below 6 percent citing several risks including debt and infaction.

IMF Managing Director Kristalina Georgieva, however, said the main obstacle is the “great vaccination divide” that has left several countries with too little access to COVID-19 vaccines.

Global trade

With poor countries likely to struggle with their vaccination rollouts, global trade is expected to remain on its expansionary trend, the Wall Street Journal reported citing the World Trade Organization.

European construction

The IHS Markit Construction PMI for the euro zone is now showing signs of stability at 50 points in September. Commercial construction fell slightly and infrastructure activity continued its trend of steep decline. However, home building activity rose for the seventh consecutive month as demand exhibited strong growth.

Moreover, construction PMI for the UK fell to 52.6 in September, indicating a slower growth compared to the previous months. This was driven by weaker demand and supply chain problems which led to a more pessimist business sentiment in September.

Retail sales

The euro zone retail sales were weaker than expected in August reaching only a 0.3 month-on-month growth rate compared to the projected 0.8 percent, according to Eurostat data. This marks a slight recovery from the setback recorded in July when it declined by 2.6 percent.

Swedish economy 

In August, Sweden’s GDP declined by 3.8 percent, compared to the previous month, data by Statistics Sweden showed. Businesses produced less and households decreased their spending contributing to this contraction.

German industrial orders

After a record month in July, Germany’s industrial orders in August fell sharply as a result of weaker foreign demand, official data showed on Wednesday. 

Korea’s inflation

The annual inflation rate for Korea reached 2.5 percent in September, barely changing from the August figure which stood at 2.6 percent. This is the sixth consecutive month in which the inflation rate was higher than the central bank’s target of 2 percent.
Similarly, the month-on-month inflation rate slightly dropped from 0.6 percent in August to 0.5 percent in September.

Interest rate

For the first time in 7 years, New Zealand’s central bank increased its interest rate to 0.5 percent from 0.25 percent on Wednesday, eliminating some of the support placed when the pandemic began. Its aim is to cool down inflationary pressures in the housing market and elsewhere.

Portuguese growth

Portugal’s central bank said that the Portuguese economy would grow at 4.8 percent this year, expanding after the pandemic-induced recession last year. This means that its June expectation remains the same.

Unemployment 

The unemployment rate in Ireland (which includes people receiving temporary COVID-19 jobless benefits) declined to 10 percent in September, compared to the 12.4 percent recorded in the previous month, Ireland’s Central Statistics Office said. However, youth unemployment rose slightly to 17.4 percent in September from 17 percent in August.