Party Pooper

Image source: Indre Pau, GraphicStore, Joe Stickman on Shutterstock

What's going on?

The International Monetary Fund (IMF) said at the weekend that it thinks Omicron could wreck the global economic recovery, so forgive us if we never invite the organization over for mojitos.

What does this mean?

Even before the arrival of the new variant, the IMF – a sort of bank for countries – was worried that the recovery was losing steam: it figured that the ongoing supply chain shortages and the uneven distribution of vaccines between rich and poor countries was bound to slow things down. It wasn’t quiet about its opinion, either, cutting its outlook for global economic growth as recently as October.

But now that the new variant has arrived, the IMF is even more leery of the recovery: it warned over the weekend that the economy could grow more slowly than even its reduced forecasts. It has a point: if vaccines don’t prove as effective against Omicron, there could be a new wave of restrictions that create a lot more supply bottlenecks, keep consumers at home, and, ultimately, drag on economic growth.

Why should I care?

The bigger picture: Any good news?
Nope: Goldman Sachs cut its own forecast for US economic growth over the weekend, for much the same reasons as the IMF. It reckons the country’s economy will grow 3.8% in 2022 versus the 4.2% it was forecasting previously (tweet this).

Zooming out: Ugh.
You can see why Garfield hates Mondays: a major British business organization lowered its expectations for UK economic growth on Monday to 6.9% in 2021 and 5.1% in 2022, down from 8.2% and 6.1% respectively. That means it’s expecting the country’s economy to be 3% smaller by the end of 2023 than it would’ve been had the pandemic never happened, and that’s based on data from before the new variant showed up…

Originally posted as part of the Finimize daily email.

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