The IMF plans to cut its global economic growth outlook “substantially” in its next update, as finance chiefs grapple with a shrinking list of options to address worsening risks.
Surging food and energy prices, slowing capital flows to emerging markets, the COVID-19 pandemic and a slowdown in China present a “much more challenging” economy for policymakers, IMF director for strategy, policy and review Ceyla Pazarbasioglu said yesterday at a panel in Bali, Indonesia.
“It’s shock after shock after shock which are really hitting the global economy,” she said.
Photo: Reuters
Pazarbasioglu spoke after G20 finance ministers and central bank governors ended a meeting on Saturday without drafting a communique, underlining the difficulty in coordinating a global response to surging inflation and recessionary fears.
The IMF in April downgraded its outlook for global expansion this year to 3.6 percent from 4.4 percent, before the war in Ukraine.
In a review due to be published this month, “we will downgrade our forecast substantially,” Pazarbasioglu said.
Central bankers around the world are having a tough time finding the right response to price increases that are driven by supply issues.
“The path to a soft landing is narrowing. We think it is still a feasible path, but certainly not a very easy one,” Bank for International Settlements head of research Shin Hyun-song said at the 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,” Shin said.
Bank Indonesia, as the host nation for the G20 meeting, has become an outlier among central banks in keeping its policy rate at a record low.
Bank Indonesia Governor Perry Warjiyo defended that view, saying that tightening too soon could risk plunging the recession-hit country into stagflation.
DOLLAR CHALLENGE: BRICS countries’ growing share of global GDP threatens the US dollar’s dominance, which some member states seek to displace for world trade US president-elect Donald Trump on Saturday threatened 100 percent tariffs against a bloc of nine nations if they act to undermine the US dollar. His threat was directed at countries in the so-called BRICS alliance, which consists of Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran and the United Arab Emirates. Turkey, Azerbaijan and Malaysia have applied to become members and several other countries have expressed interest in joining. While the US dollar is by far the most-used currency in global business and has survived past challenges to its preeminence, members of the alliance and other developing nations say they are fed
LIMITED MEASURES: The proposed restrictions on Chinese chip exports are weaker than previously considered, following lobbying by major US firms, sources said US President Joe Biden’s administration is weighing additional curbs on sales of semiconductor equipment and artificial intelligence (AI) memory chips to China that would escalate the US crackdown on Beijing’s tech ambitions, but stop short of some stricter measures previously considered, said sources familiar with the matter. The restrictions could be unveiled as soon as next week, said the sources, who emphasized that the timing and contours of the rules have changed several times, and that nothing is final until they are published. The measures follow months of deliberations by US officials, negotiations with allies in Japan and the Netherlands, and
Foxconn Technology Group (富士康科技集團) yesterday said it expects any impact of new tariffs from US president-elect Donald Trump to hit the company less than its rivals, citing its global manufacturing footprint. Young Liu (劉揚偉), chairman of the contract manufacturer and key Apple Inc supplier, told reporters after a forum in Taipei that it saw the primary impact of any fresh tariffs falling on its clients because its business model is based on contract manufacturing. “Clients may decide to shift production locations, but looking at Foxconn’s global footprint, we are ahead. As a result, the impact on us is likely smaller compared to
TECH COMPETITION: The US restricted sales of two dozen types of manufacturing equipment and three software tools, and blacklisted 140 more Chinese entities US President Joe Biden’s administration unveiled new restrictions on China’s access to vital components for chips and artificial intelligence (AI), escalating a campaign to contain Beijing’s technological ambitions. The US Department of Commerce slapped additional curbs on the sale of high-bandwidth memory (HBM) and chipmaking gear, including that produced by US firms at foreign facilities. It also blacklisted 140 more Chinese entities that it accused of acting on Beijing’s behalf, although it did not name them in an initial statement. Full details on the new sanctions and Entity List additions were to be published later yesterday, a US official said. The US “will