The IMF chief has issued a gloomy assessment of the global economy, signalling that the fund will issue fresh downgrades of its economic projections next week. Kristalina Georgieva warned that growth in all of the world’s largest economies was slowing down, leaving “severe strains” in some places. The near collapse of some UK pension funds last week following Kwasi Kwarteng’s announcement of £45bn worth of unfunded tax cuts has sparked concerns that low growth and higher borrowing costs will trigger market turmoil. In an interview with CNBC later on Thursday, managing director said the task confronting the US central bank was particularly challenging and described the path chair Jay Powell has to navigate as “very narrow”. She also noted the material impact that Fed’s aggressive campaign to tighten monetary policy was having globally, saying that it was hitting emerging markets with weaker fundamentals and causing defaults across low-income countries.
The International Monetary Fund (IMF) is an international organization that promotes global monetary cooperation, encourages high employment and sustainable economic growth, and provides temporary financial assistance to countries to help ease balance of payments difficulties.
Meanwhile, Janet Yellen implored central banks to “recognise that macroeconomic tightening in advanced countries can have international spillovers” without naming any particular country..Georgieva’s speech showed the fund was in no mood to offer more nuanced advice ahead of finance ministers’and central bankers visits to Washington next week. Calling for temporary and targeted support for vulnerable families, she said controlling prices for an extended period time is not effective”. High food prices were causing pain for households in emerging economies and unsustainable debt crisis in many countries, she added.
The global economy is in a state of flux. Political upheavals and natural disasters have led to economic instability in many parts of the world. This has had an impact on trade, investment and employment levels. In order to maintain stability, governments and international organizations are working together to manage the global economy.
Some of the key issues that are currently being addressed include: managing protectionism; increasing access to finance; promoting sustainable development; tackling climate change; curbing tax evasion and money laundering; reforming labour markets; improving infrastructure; addressing rising inequality levels etc. Despite these challenges, there are also opportunities for growth in the global economy – such as the rise of emerging markets, technological advancements and increased demand for goods and services from a growing population.
In order to ensure future prosperity, it is essential that policymakers continue to work together across borders to find solutions which promote inclusive growth andshared prosperity
