July 18, 2022 (MLN): The International Monetary Fund will cut its global economic growth outlook “substantially”, in the upcoming next update as finance chiefs grapple with a shrinking list of options to address the worsening risks, Bloomberg reported today.
The IMF’s director for strategy, policy and review, Ceyla Pazarbasioglu Said that Surging food and energy prices, slowing capital flows to emerging markets, the ongoing pandemic and a slowdown in China make it “much more challenging” for policymakers, “ It’s shock after shock after shock which are really hitting the global economy.”
She stated this after, the meeting between the Group of 20 finance ministers and central bank governors ended their meeting without reaching a communique, underlining the difficulty in coordinating a global response to surging inflation and recessionary Fears.
A downgraded outlook from 4.4% to 3.6% for the global expansion has been done by IMF before the war in Ukraine, in its April report. Pazarbasioglu said the IMF will downgrade our forecast substantially, In a review due this month.
Due to the increase in price that is driven by supply issues Central bankers around the world are finding it quite difficult to find the right reason for it.
Hyun Song Shin, head of research at the Bank for International Settlements said that “The path to a soft landing is narrowing; we think it is still a feasible path but certainly not a very easy one,” while in the same panel “Where central banks take monetary policy in a rapid and decisive manner and have a front-loaded response to inflation, that is more conducive to a soft landing.”
As the host nation for the G-20 meeting summit in Bali, Bank Indonesia has come out as an outlier in keeping its policy rate at a record low. While Governor Perry Warjiyo has defended that view, saying that tightening too soon could risk plunging the country, fresh out of a pandemic-driven recession, into stagflation instead.
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