Fund likely to downgrade global economic projections as new virus variant could pose a ‘confidence dent’
IMF Managing Director Kristalina Georgieva said on Friday that global economic growth projections from the International Monetary Fund will be downgraded due to the emergence of the Omicron version of the coronavirus.
“A new version that can spread too quickly can undermine confidence, and in that sense, we may see some decline in our October projections for global growth,” Ms Georgieva said during the Reuters Next Conference. “
The IMF said in October that it expects the global economy to grow 5.9% this year and 4.9% next year, then pointing to the threat of new coronavirus variants adding to uncertainty about the timeline for overcoming the COVID-19 pandemic. Is.
Ms Georgieva said high inflation in the United States should be addressed by policymakers, but that such heavy price pressures were not being seen the same way around the world, allowing other economies to change policy at their own pace. .
The head of the IMF said the strength of the US economy had a positive impact around the world, even if it means the US Federal Reserve will wind up its liberal policy stance in the coming months, as most economists now expect.
“We believe that the path to a policy rate hike can be accelerated,” she said, pointing to 2022 as a possible target.
Ms Georgieva said the tariff cuts were a “useful tool” to help control inflation and she was encouraged by US Trade Representative Catherine Tai’s work on cutting tariffs through an exclusion process.
“It is not a silver bullet. Action should be taken on all these fronts so that we can see the inflation issue being contained.
Debt as a ‘headwind’
The IMF MD called for more aggressive debt restructuring for existing debt burdens in developing countries so as not to create long-term headwinds.
“The reality is that 2022 is going to be a very pressing year in terms of debt handling,” she said, adding that sovereign debt grew 18% during the COVID pandemic and it will take decades to get back to pre-pandemic levels Unless there is a “much more discreet and aggressive” policy.
“So far, interest rates are relatively low, it’s not that dramatic. Going forward… it might not happen.”
Ms Georgieva defended the fund against criticism of its work on climate change, which she saw as an important element of macroeconomic stability.
“I don’t think there are many people today who can see climate change as not being important to stability, growth and employment. It is. And the reason the IMF is involved on this topic is because our members For, it matters.”
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