The COVID-19 pandemic, especially after the emergence of the highly transmissible Delta variant, continues hurting the global economy, analysts at Bloomberg said. Most recent data indicated that some economic sectors were flagging as outbreaks hit spending and snarled up the world’s supply chain while threatening to keep inflation elevated.
Bloomberg economists projected the US economy to grow at an annualized rate of 5.8% quarter-on-quarter in July-September, slowing down from a 6.6% print in the previous quarter. Meanwhile, China’s economy is on course to expand 6.1% year-on-year in the same period, down from 7.9% in the prior quarter. The slowdowns are faster than what economists initially anticipated and leave policymakers with a challenging combination of weakening recovery and persistent price pressure.
The analysts, however, expect the US consumer price index to hit a peak and begin to decline in the third quarter. This will leave the Federal Reserve with a tough call to balance its policy between supporting recovery and easing price pressure. Meanwhile, the People’s Bank of China is facing a different trade-off between propping up growth and taming down credit bubble risks.
