Weaker global growth, vaccine protectionism and the specter of 1970s-style inflation are haunting large economies. As the IMF prepares for its annual gathering this week, the contrast with the spring could not be starker.
In April, at the Washington-based fund’s previous virtual meeting, there were sharp upgrades for global growth amid a sense of optimism for the road ahead, led by stronger-than-expected recoveries in the US, the UK and other advanced economies.
Vaccines were expected to pave the way for the swift unlocking of COVID-19 pandemic restrictions, fueling a rapid recovery from the worst global recession since the 1930s Great Depression.
Photo: Reuters
Since then, the sprint back to economic health has slowed to a hobble, IMF managing director Kristalina Georgieva said last week.
“We are unable to walk forward properly — it is like walking with stones in our shoes,” Georgieva said.
Tomorrow, the IMF is expected to issue a downbeat economic outlook for the rest of the year, as a summer of supply-chain bottlenecks and rising inflationary pressures risks worsening this autumn.
In July, the IMF predicted 6 percent growth for the global economy this year, but Georgieva said last week that this would be scaled down in its updated World Economic Outlook report.
The IMF is expected to say that low-income nations are still not getting adequate access to COVID-19 vaccines, in a development likely to cost the world economy at large if left unaddressed.
“We need a bigger push,” Georgieva said last week, calling for a sharp increase in the delivery of vaccines to the developing world.
Taking place virtually for a second consecutive year, the meetings come as a cloud of controversy envelopes the IMF, following allegations that Georgieva artificially boosted China’s ranking in a flagship World Bank report on the best countries to do business with, in her previous job at the bank.
Georgieva met the IMF board last week in an attempt to rebut the accusations against her, issuing a statement to say that she looked forward to resolving the matter.
However, the controversy is unlikely to overshadow the storm clouds gathering for the world economy, with expectations that rising inflation could force major central banks to reduce their pandemic stimulus measures at a time when the recovery from COVID-19 remains incomplete.
With supply shortages set to persist well into next year as the SARS-CoV-2 Delta variant prevents a return to relative normality, a period of stagflation — stagnant growth and high inflation, reminiscent of the 1970s — could be on the cards.
It is all a long way from the IMF’s optimism of the spring. If the outlook were to deteriorate at anything like the pace of the past six months, a renewed winter of discontent likely lies ahead.
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has appointed Rose Castanares, executive vice president of TSMC Arizona, as president of the subsidiary, which is responsible for carrying out massive investments by the Taiwanese tech giant in the US state, the company said in a statement yesterday. Castanares will succeed Brian Harrison as president of the Arizona subsidiary on Oct. 1 after the incumbent president steps down from the position with a transfer to the Arizona CEO office to serve as an advisor to TSMC Arizona’s chairman, the statement said. According to TSMC, Harrison is scheduled to retire on Dec. 31. Castanares joined TSMC in
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
FACTORY SHIFT: While Taiwan produces most of the world’s AI servers, firms are under pressure to move manufacturing amid geopolitical tensions Lenovo Group Ltd (聯想) started building artificial intelligence (AI) servers in India’s south, the latest boon for the rapidly growing country’s push to become a high-tech powerhouse. The company yesterday said it has started making the large, powerful computers in Pondicherry, southeastern India, moving beyond products such as laptops and smartphones. The Chinese company would also build out its facilities in the Bangalore region, including a research lab with a focus on AI. Lenovo’s plans mark another win for Indian Prime Minister Narendra Modi, who tries to attract more technology investment into the country. While India’s tense relationship with China has suffered setbacks
RSS