HE tightening monetary policy adopted by the majority Central banks to fight inflation This bearing fruit and accordingly International Monetary Fund (IMF) A few more rate hikes will be necessary, but the organization will also He warned against premature cuts “to ensure that the progress made over the last 18 months is not wasted” and emphasizes that “the margin for error on the policy front is slim.”
This is one of the results of the study Global Economic Outlook report The report presented by the IMF on Tuesday marrakeshThis will come several weeks before the European Central Bank’s next decision on October 26 and the US Federal Reserve on November 1.
The organization insists on phasing out general fiscal measures such as energy subsidies and opting for special aid for the most vulnerable.
The document also values: economic recovery In the wake of the pandemic and the impact of the war in Ukraine ““slow and uneven” Although he estimates that risks to growth are more balanced than they were six months ago, he assures that “these risks continue to tip the balance towards a deterioration in the outlook.”
For this year As in the last update of the IMF’s forecasts in July, The global slowdown in growth will leave it at 3%, and expectation 2024during the period it is expected to remain in 2.9%.
The IMF also worsened its forecast, reducing Spain’s 2024 growth to 1.7%
The report also draws attention to the following: special interest to predictions global growth in the medium term (five years), which is an estimate of 3.1%. lowest level in decades. And in this dark outlook, the weakest forecasts are for emerging markets and developing economies. two fears of quick recovery and its concentration blockage and fragmentation It also warns that “the chances of countries achieving higher living standards are slim.”
War between Israel and Palestinians
The Global Economic Outlook report, presented in Marrakech on Tuesday, was written before the war declared between Israel and the Palestinians this Saturday. “It is too early to predict what impact this will have on the economy. We all hope that the tensions will ease quickly,” the IMF’s chief economist said. Pierre-Olivier GourinchasAt the press conference held during the presentation of the report.
However, he touched upon the possible effects of a possible increase in oil prices as a result of this conflict in the Middle East on the world economy. According to the IMF’s preliminary estimates, a 10 percent increase in oil prices could reduce global economic growth by 0.15 percentage points and contribute 0.4 percentage points to global inflation. “But it is too early to draw any conclusions,” Gourinchas cautioned.
Rates and inflation
In its report, the IMF insists that rapid interest rate increases over the last 18 months are a necessary response to inflationary pressures and advocates caution in avoiding premature cuts that would lead to recessions. He points out that in addition to these monetary policies, most of the decrease in inflation is due to these policies. The price of both agricultural and mining raw materials is falling in international markets.
Although global inflation is expected to continue to fall, this is due to a combination of monetary policy and the decline in raw material prices. remains “disturbingly high” It is not expected to return to target levels in most cases until 2025. underlying pressures can create these “needs” higher than expected monetary policy interest rates”.
As in the field of growth, there are significant differences between the forecasts for developed economies and emerging and developing economies, and even between groups. And the report suggests: “if new Climatic and geopolitical shocks, “There may be additional increases in food and energy prices.”
You are kindly requested to follow the same Coordination of monetary policies with fiscal policiesurges everyone to focus on “what matters” rebuilding fiscal buffers It has been seriously eroded due to the epidemic and energy crisis.” In this field this is called going for example Phasing out general tax measures such as energy subsidies, When prices return to pre-pandemic levelsProtecting the most vulnerable with special assistance for households, “Especially in the context of large fluctuations in energy and food prices.”
Weak growth in Europe
90 percent of developed economies will feel the slowdown in growth this year. And while the economy continues The US is experiencing a moment of momentum, Forecasts have been improved by three tenths for this year and five for next year compared to July, and they now leave their own growth expectations at 2.1% and 1.5%, respectively. inside eurozone Growth is weaker than expected. That makes them Forecasts for this year worsen by two tenthsWhen Growth will remain at 0.7 percentAnd three for the next one, then it will be 1.2%.
China and climate change
The outlook for the global economy also faces other risks, including the possibility of further weakening of growth in China, where the housing crisis could deepen further.
Additionally, the IMF reminds that: intense heat waves and droughts Among this year’s record temperatures Preview of a less livable future hallmark of global climate change” and warns: “they Possible most common failures in crops “It will lead to increased food prices and food insecurity in different countries.”