## Economic Indicators Signal Diminished Growth Momentum at Start of Year

_IMF Blog, February 24, 2022_

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**Canonical URL:** [Economic Indicators Signal Diminished Growth Momentum at Start of Year](https://www.imf.org/en/blogs/articles/2022/02/24/economic-indicators-signal-diminished-growth-momentum-at-start-of-year)

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## Bibliographic details
- Authors: Tryggvi Gudmundsson
- Published: February 24, 2022

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### Overview
- The economic recovery continues, though the pace of the recovery has slowed.
- High-frequency economic indicators show growth momentum has slowed going into 2022, consistent with expectations of a weak start to the year due to the spread of the Omicron variant and persistent supply-chain disruptions.
- Activity is projected to pick up in the second quarter of the year as the variant’s impact fades.

### Global forecast and growth projections
- The global forecast was lowered in January to a still-healthy 4.4 percent expansion this year.
- This was down from an October projection of 4.9 percent, amid reduced growth prospects for the United States and China, the two largest economies.

### High-frequency indicators and PMIs
- Composite gauges of manufacturing and service sector activity in many Group of Twenty economies highlight recent softening.
- In some economies, the purchasing managers’ index indicated a slower pace of expansion in January compared with the prior two months.
- A few PMI gauges, including Australia and Spain, swung below 50—the threshold signaling a contraction.

### Advanced economies: developments and channels
- Advanced economies have experienced pandemic strains and mismatches between supply and demand that have continued to boost inflation and weigh on the recovery.
- Temporarily reduced mobility from the rapid spread of the Omicron variant has dampened service sector activity in the euro area, Japan, and the United Kingdom.
- Continued supply disruptions have also weighed on activity in the euro area and United Kingdom.
- In the United States, the recovery has been strong, but the virus has dented consumer sentiment somewhat.

### Emerging economies: developments and channels
- Pandemic curbs and reduced policy support are weighing on activity in emerging economies.
- Other recent data pointing to softer momentum include lower industrial production in Brazil.
- In China, tighter mobility restrictions have resulted in weaker-than-expected retail sales; a decline in real estate investment and tighter travel restrictions have also represented headwinds.

### Inflation, financial markets, and risks
- Inflation has been higher than expected in many economies.
- Financial markets remain volatile as geopolitical tensions have increased.
- These obstacles, combined with reduced growth momentum, underline risks to the recovery trajectory.

### Policy recommendations and priorities
- Strong international cooperation is needed to:
  - End the pandemic.
  - Navigate monetary tightening.
  - Shift focus to fiscal sustainability.

*Tryggvi Gudmundsson, February 24, 2022 — IMF Blog*

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## References

- [our global forecast was lowered](https://www.imf.org/en/Publications/WEO/Issues/2022/01/25/world-economic-outlook-update-january-2022)
- [Chart of the Week](https://www.imf.org/en/News/Chart-of-the-week)
- [https://www.imf.org/wp-content/uploads/2022/02/G20-COTW-Blog-Chart.jpg](https://www.imf.org/wp-content/uploads/2022/02/G20-COTW-Blog-Chart.jpg)
- [recent report to the G20](https://www.imf.org/external/np/g20/021622.htm)
- [inflation](https://blogs.imf.org/2022/01/28/global-inflation-pressures-broadened-on-food-and-energy-price-gains/)
- [euro area](https://blogs.imf.org/2022/02/17/supply-disruptions-add-to-inflation-undermine-recovery-in-europe/)
- [the world needs strong international cooperation](https://blogs.imf.org/2022/02/16/three-policy-priorities-for-a-robust-recovery/)

_Source: https://www.imf.org/en/blogs/articles/2022/02/24/economic-indicators-signal-diminished-growth-momentum-at-start-of-year_