Jakarta: The International Monetary Fund (IMF) has lowered Indonesia's growth forecast to 3.2% from 3.9% for this year in its latest World Economic Outlook (WEO).
"The spread of the delta variant is the main cause of the downgrade," the report stated.
Moreover, the IMF has also downgraded its global growth forecast slightly to 5.9% for 2021.
According to the IMF, the ongoing pandemic is widening divergence between countries with access to adequate supplies of vaccine and those without.
The COVID-19 pandemic has caused a rise in debt, while also causing disruptions to global supply chains which has led to inflationary pressure especially on food and fuel, IMF chief economist Gita Gopinath said Tuesday as the organization’s Annual Meetings kicked off in Washington.
"The global recovery continues but the momentum has weakened, hobbled by the pandemic. Fueled by the highly transmissible Delta variant, you will recall that the global COVID?19 death?toll has risen close to 5 million and risks abound, holding back a full return to normalcy. Pandemic outbreaks and critical links of global supply chains have resulted in longer?than?expected supply disruptions, feeding inflation in many countries," said Gopinath.
"On the one hand, pandemic outbreaks and climate disruptions have resulted in shortages of key inputs and lowered manufacturing activity in several countries. On the other hand, these supply shortages, alongside the release of pent?up demand and the rebound in commodity prices, have caused consumer price inflation to increase rapidly in many countries," Gopinath added at virtual news conference.
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