ESG Telegraph
  • Home
  • Latest News
  • Environment
  • Companies
  • Investors
  • Governance
  • Markets
  • Social
  • Regulators
  • Sustainable Finance
Featured Posts
    • Latest News
    Stock markets subdued after weaker than expected Chinese data
    • August 15, 2022
    • Companies
    Vanguard active funds suffer bloodiest first-half on record
    • August 15, 2022
    • Markets
    Why the Fed might be at ‘neutral’ already on monetary policy
    • August 15, 2022
    • Latest News
    Rio Tinto rebuffed in plan to take control of Mongolia copper project
    • August 15, 2022
    • Companies
    Digital advertising: Apple takes bigger bite of new business
    • August 15, 2022
Featured Categories
Belarussia
View Posts
Companies
View Posts
Energy
View Posts
Environment
View Posts
Food
View Posts
Governance
View Posts
Health
View Posts
Investors
View Posts
Latest News
View Posts
Markets
View Posts
Potash
View Posts
Regulators
View Posts
Russsia
View Posts
Social
View Posts
Supply Chain
View Posts
Sustainable Finance
View Posts
Technology
View Posts
Uncategorized
View Posts
ESG Telegraph ESG Telegraph
7K
9K
4K
1K
ESG Telegraph ESG Telegraph
  • Home
  • Latest News
  • Environment
  • Companies
  • Investors
  • Governance
  • Markets
  • Social
  • Regulators
  • Sustainable Finance
  • Latest News

IMF warns of ‘multiple challenges’ to global economic recovery

  • January 25, 2022
  • Staff
Total
0
Shares
0
0
0

The global economic recovery from coronavirus will run into “multiple challenges” this year, the IMF said on Tuesday, warning of lower growth and higher inflation.

Significantly downgrading its 2022 forecasts for economic activity in the world’s two largest economies, China and the US, the updated economic forecasts from the fund show it becoming more pessimistic about the scope for a full recovery from the pandemic.

The outlook would be even worse, the IMF added, if central banks have to take firmer action to quell inflation or geopolitical tensions in Ukraine intensify.

The IMF’s forecast for the global economy is for growth in gross domestic product to slow from 5.9 per cent in 2021 to 4.4 per cent this year, weakening further in 2023 to only 3.8 per cent.

The fund has knocked 0.5 percentage points off its growth forecast for 2022 with only a modest bounce back of 0.2 percentage points for 2023.

Gita Gopinath, the IMF’s first deputy managing director, said in a blog post that the world economy was grappling with supply disruptions, higher inflation, record debt and uncertainty. “The continuing global recovery faces multiple challenges as the pandemic enters its third year,” she said.

“The last two years reaffirm that this crisis and the ongoing recovery is like no other,” Gopinath added. “Policymakers must vigilantly monitor a broad swath of incoming economic data, prepare for contingencies and be ready to communicate and execute policy changes at short notice.”

The IMF significantly downgraded its forecast for US economic growth in 2022, from 5.2 per cent in its October outlook to 4 per cent just three months later. It judged that the administration of Joe Biden was no longer likely to pass its Build Back Better legislation.

Even with slower growth, the IMF thought the Federal Reserve would need to tighten monetary policy faster than it previously expected.

“Everything points in the same direction when it comes to monetary policy, which is the need to cool down the economy to bring down inflation,” said Gopinath in an interview with the Financial Times.

Ahead of the Fed’s first monetary policy meeting of the year this week, Gopinath said there was likely to be volatility in markets this year. “This makes the job of the Fed even more important — to very, very clearly communicate how they are reading inflation and how they expect to respond to this over time.”

For China, the fund downgraded the 2022 growth outlook from 5.6 per cent to 4.8 per cent on the back of the restrictions needed to continue with its zero-Covid policy and the retrenchment in the property sector.

But Gopinath did not think a Chinese slowdown stemming from its property sector would derail the global economy. “China has both the monetary and fiscal space to deal with the macro consequences of something like that, and does have some ability to ensure that there is some orderly restructuring and that it doesn’t spill over to financially viable firms.”

The IMF also forecast UK growth to moderate after a strong 2022, with the economy expanding just 0.5 per cent in 2023.

The eurozone growth outlook was maintained albeit with a weaker recovery forecast, reflecting disruptions from the Omicron wave of Covid-19, followed by faster growth in 2023.

Bar chart of Economic growth in 2022 (%) showing Downgrades in growth forecasts for most large economies since October

For almost all of the world, inflation is now expected to be higher this year, requiring central banks to tighten monetary policy and putting pressure on countries to make sure their levels of borrowing come down as the cost of credit rises.

This will put most pressure on emerging and developing economies, the fund said, adding to concerns raised earlier this year by the World Bank. Those with large amounts of foreign currency-denominated debt will be most at risk.

Gopinath said the most important economic policy initiative would be “to break the hold of the pandemic”, requiring a larger and more equitable supply of Covid-19 vaccines, tests and therapeutic drugs.

Total
0
Shares
Share 0
Tweet 0
Pin it 0
You May Also Like
Read More
  • Latest News

Stock markets subdued after weaker than expected Chinese data

  • Staff
  • August 15, 2022
Read More
  • Latest News

Rio Tinto rebuffed in plan to take control of Mongolia copper project

  • Staff
  • August 15, 2022
Read More
  • Latest News

At 75, India is finally ready to join the global party

  • Staff
  • August 15, 2022
Read More
  • Latest News

China cuts lending rate as economic data disappoint and Covid cases rise

  • Staff
  • August 15, 2022
Read More
  • Latest News

Engagement with Afghanistan will promote broader US strategic goals

  • Staff
  • August 15, 2022
Read More
  • Latest News

Brexit intensifies labour shortages as companies struggle to hire

  • Staff
  • August 15, 2022
Read More
  • Latest News

A €1 dream scheme sparks a wider homebuying trend in Sicily

  • Staff
  • August 15, 2022
Read More
  • Latest News

The family holiday just got political

  • Staff
  • August 14, 2022

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Featured Posts
  • 1
    Stock markets subdued after weaker than expected Chinese data
    • August 15, 2022
  • 2
    Vanguard active funds suffer bloodiest first-half on record
    • August 15, 2022
  • 3
    Why the Fed might be at ‘neutral’ already on monetary policy
    • August 15, 2022
  • 4
    Rio Tinto rebuffed in plan to take control of Mongolia copper project
    • August 15, 2022
  • 5
    Digital advertising: Apple takes bigger bite of new business
    • August 15, 2022
Recent Posts
  • At 75, India is finally ready to join the global party
    • August 15, 2022
  • Climate and crypto fraught with challenges for regulators 
    • August 15, 2022
  • China cuts lending rate as economic data disappoint and Covid cases rise
    • August 15, 2022

Sign Up for Our Newsletters

Subscribe now to our newsletter

ESG Telegraph
  • Home
  • Privacy Policy
  • Guest Post
  • Contact

Input your search keywords and press Enter.