A Pandemic relentless invasion Ukraine, air disasters on every continent and now caused by a cost of living crisis. illegal and resident inflation. The blows to the world economy come one after another and they weigh heavily. But it’s beyond the immediate challenges presented by the situation that prompted the International World Fund to cut its global growth forecasts to 2.7% for 2023 this week, warning that “the worst is yet to come”, once the risk of recession is high. again hit the poorest especially hard, we see deeper question: probability “a fundamental change in the world economy predictability and stability over higher values uncertainty and volatility”.
That’s the hypothesis that came out this Thursday. Kristalina Georgieva, Director of the International Monetary Fund, at a press conference in Washington, where the body held its fall meeting. “We need to carefully examine the phenomenon of inflation in this new world we find ourselves in. fragmentation in the world economy means we can see Changes in supply chains affect cost structures more permanentlyAnd that’s not something monetary policy can deal with,” he said. “If we lose the benefits of a more integrated global economy, we will all be poorer, and the impact will be felt most dramatically in emerging markets and emerging economies.”
Fed support
For example, although there are as yet no definitive answers to these more structural changes that could go beyond the impact of Russia’s open war on fuel prices, food or energy Georgieva argued that the only way for those responsible for monetary and fiscal policy to respond to this “much more complex” moment is to “maintain a balance”. steady hand”.
As we start the Bulgarian messages, United States of America The latest inflation data in the country. they knew worse than expectedespecially in terms of inflation. underlyingexcluding food and energy, and 6.6% annualized, highest level since 1982. and reaffirmed the options. Federal Reserve Continuing with the policy of aggressive rate hikes, in which she seeks to contain price increases, is a path that presents risks and has a negative impact on other economies, but which Georgieva has thwarted. backed up.
“We know that these rate hikes come with them. growth costs “But we also know that failing to tighten the conditions to control inflation will mean that rates will stay higher for longer, which will ultimately hurt growth and people more,” he said. “We can’t let inflation be a derailed train”, he added at another time. “It’s bad for growth and bad for people, especially poor people.”
fiscal policy
The managing director also wanted to reinforce the IMF’s message launched this week: the need to focus on tackling inflation while also implementing fiscal policies that help the most vulnerable in the current crisis situation, but without getting involved. And he did it with a graphic image: “When monetary policy puts one foot on the brakes most Fiscal policy should not step on the accelerator because if so very dangerous journey“, he said.
Description of the IMF and its director, ” very defined and tentative goals”, to move away from sweeping steps such as general tax cuts that are “neither effective nor affordable”. And these are the ones that Georgieva especially United KingdomBut he said he wanted it heard in other capitals as well: “Fiscal policy should not undermine monetary policy because if it does, the task will be more difficult and will increase the need for more rate hikes and tougher financial conditions,” he insisted. , “Don’t prolong the pain. Be sure actions are consistent and consistent.
recession
In her appearance, Georgieva returned to offer another forecast Tuesday’s World Economic Outlook report has already offered: two-thirds of economies Register two or more consecutive quarter contractions and an increased probability of global growth falling below 2%. “A 25% risk of global recession not insignificant but we still have instruments It’s a narrow path to navigate it, but it’s there,” he said, putting a hopeful note and using one of his similar graphics. “It’s like climbing a mountain: if we don’t shake hands and follow in each other’s footsteps, we can avoid a global recession.”