21st Century Business Herald reporter Shu Xiaoting Beijing report
On October 11th local time, International Monetary Fund released the latest issue of the " World Economic Outlook Report " (hereinafter referred to as the "Report"). The report notes that global economic activity is experiencing a widespread, more severe slowdown than expected, with inflation reaching its highest levels in decades. "The cost of living crisis, tightening of fiscal conditions in most regions, the Russian-Ukrainian conflict and the ongoing COVID-19 epidemic have seriously affected the economic outlook."
(Site of the "World Economic Outlook Report" press conference, Xiang Xiufang/photo)
According to the report, global economic growth is expected to slow from 6.0% in 2021 to 3.2% in 2022 and 2.7% in 2023. The economy of the United States, EU and China will continue to slow down. Specifically, under the influence of tightening of the monetary and financial environment, the US economic growth is expected to slow down to 1% in 2023. At the same time, IMF lowered China's economic growth forecast for 2023 to 4.4%, and euro zone is expected to grow by 0.5% in 2023 due to the impact of energy shortage.
"Despite the economic slowdown, inflation pressures have proven to be broader and longer lasting than expected." The report pointed out that global inflation rate is expected to rise from 4.7% in 2021 to 8.8% in 2022, and to 6.5% and 4.1% in 2023 and 2024, respectively.
At present, central banks of various countries focus on restoring price stability, and the pace of tightening has also accelerated sharply. The report said that monetary policy should adhere to the goal of restoring price stability, and fiscal policy should aim to reduce the pressure on living costs while maintaining a sufficiently tight stance consistent with monetary policy. First, fiscal policy should not go against monetary authorities' efforts to reduce inflation. Secondly, fiscal policy can help economies adapt to more unstable environments and increase their flexibility in responding to crises in the future by investing in production capacity, such as human capital, digitalization, green energy and diversification of supply chains.
In addition to coping with the cost of living crisis, many emerging markets also face challenges brought by the strengthening of the US dollar. The report believes that for most emerging markets and developing countries, the appropriate response is to adjust monetary policies to maintain price stability, while preventing financial conditions from deteriorating through exchange rate adjustments and the use of foreign exchange reserves.
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