The world economy is running hotter than expected

The International Monetary Fund (IMF) has revised its global economic growth forecast upwards, predicting a stronger recovery than previously anticipated. However, the fund also warned of higher inflation, which could pose challenges to policymakers.

The IMF's latest World Economic Outlook report projects global growth to reach 6% in 2021, up from its previous estimate of 5.6%. This is the fastest pace since the 1970s, driven by robust growth in advanced economies and a stronger-than-expected recovery in emerging markets.

However, the IMF also noted that inflation has been higher and more persistent than expected, with supply bottlenecks and pent-up demand contributing to price increases. The fund now projects global inflation to reach 4.9% in 2021, up from its previous estimate of 4.2%.

The report also highlighted the uneven recovery across countries, with low-income households and small businesses disproportionately affected by the pandemic. The IMF called for policies to support the most vulnerable and to ensure a sustainable and inclusive recovery.