On the 6th local time, Kristalina Georgieva, president of the International Monetary Fund (IMF), warned that "high inflation does not recede, rising borrowing costs and continued supply chain disruptions" continue to hit the global economy, and the risk of recession is rising. 3 countries and regions that account for one-third of the global economic output are expected to shrink at least for two consecutive quarters this year and next year.
" The global economy is undergoing a fundamental transformation, from a relatively predictable world, that is, a world with an international economic cooperation framework and a low interest rate and low inflation environment, to a more fragile world, with rising uncertainty, increasing economic volatility, intensifying geopolitical confrontation, and frequent natural disasters and becoming increasingly severe." Georgieva said.
will lower the economic growth forecast for 2023
International Monetary Fund and World Bank 2022 Autumn Annual Meeting will be held in Washington, DC, USA from October 10 to 16. At that time, the finance ministers of various countries, the governors of the central bank, and experts and scholars will discuss a wide range of issues such as the world economic situation and the coordination of macro policies of . During the meeting, the IMF will release its latest global economic outlook report. In July, the agency expected that global economic growth will slow to 3.2% this year from 6.1% last year, and further drop to 2.9% in 2023. Georgieva revealed on Thursday that the 2.9% growth rate next year will be lowered again next week, which also means that the IMF has lowered its growth forecast for four consecutive quarters.
Georgieva said that the global economy is suffering multiple shocks, including the Russian-Ukrainian conflict, high energy and food prices, tightening of the financial environment and continuous supply constraints, and the growth of all large economies in the world is slowing down. Among them, energy shortages severely hit the economy in the euro zone. High inflation in the United States has led to a decline in both disposable income and consumer demand. The rise in interest rates has dragged down investment, and the growth momentum is slowing down.
"In the short term, things are more likely to get worse than get better," Georgieva said.
IMF predicts that by 2026, global output losses will reach about US$4 trillion, equivalent to the economic scale of the entire Germany, and will be a huge setback for global economic development.
calls on central banks to "stay to the end" in response to high inflation
Although the risk of recession is intensifying and the outlook is becoming dim, the IMF calls on central banks to "stay to the end" in response to high inflation. "Although this may be painful, it is necessary and right." Georgieva said, "Insufficient tightening will lead to inflation being out of anchorage and becoming increasingly ingrained, forcing central banks to implement higher interest rates in the future and maintain them for longer, which will cause huge harm to the economy and the people."
However, she also admitted that when policymakers tighten monetary policy so quickly, it will be difficult to judge the policy impact. A sharp hike in many countries may lead to a long-term recession.
Previously, the World Bank released a study in September showing that the simultaneous interest rate hikes in central banks in various countries will bring financial crises to emerging markets and developing economies, causing lasting damage, and called on developed economies to fully consider the spillover effect of when their monetary policy adjustments are made.
htmlOn the 31st, United Nations Conference on Trade and Development (hereinafter referred to as "UNDC ") released its latest report, saying that if some developed economies do not quickly adjust their main fiscal and monetary policies, the world will fall into economic recession and long-term economic stagnation, which may be more serious than the global financial crisis from 2007 to 2009. The agency said that excessive currency tightening and lack of financial support may put the developing economies in a series of crises. UNCTAD Secretary-General Rebeca Grynspan said: "The current action plan has hurt the interests of the most vulnerable countries, and it is still time to start taking action to avoid an economic recession."
Emerging markets and developing economies face shocks
How to stabilize the global economy under the headwind? The IMF recommends that policy makers focus on three major issues: resolutely curb inflation, develop responsible fiscal policies, and jointly support emerging markets and developing economies.
IMF said that governments should accurately introduce temporary fiscal measures for low-income families to avoid indiscriminate fiscal stimulus, because the wide scope of fiscal support will greatly increase the difficulty of fighting inflation. "When monetary policy hits the brakes, you should no longer step on the accelerator of fiscal policy. Otherwise, it will be a difficult journey," said Georgieva.
She also pointed out that many emerging markets and developing economies face a triple blow from strengthening the dollar, rising borrowing costs and capital outflows. In the next three quarters, the probability of securities investment outflows in emerging markets has risen to 40%, which may pose a major challenge to countries with high demand for external financing.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-