Christine Lagarde, President of the European Central Bank
IMF, the world economy will grow but will lose momentum due to the new variants of Coronavirus
At the World Economics Forum carried out in a virtual way, the great novelty was to see how women have acquired relevance at the head of the main international economic positions. Kristalina Georgieva has headed the International Monetary Fund (IMF) since 2019, where she succeeded Christine Lagarde, who at that time chaired the European Central Bank (ECB). Together with them, in the same debate, he participated Sri Mulyani Indrawati, Indonesian finance minister and in that capacity this year’s president of the economic meetings of the G-20, the group that brings together the world’s major economies. Last but not least as a female ninety weight was the US Treasury Secretary, Janet Yellen, named by Joe Biden after his arrival at the White House. In 2021, Yellen was optimistic about the recovery of the US economy.
Kristalina Georgieva confirms that the global economic recovery will continue
“The positive fact is that the global global recovery will continue in 2022, but will lose momentum in the face of new waves of contagion most likely caused from the possible appearance of new variants of the Coronavirus. Inflation remains higher than expected and this puts pressure on high levels of debt above 26 billion dollars (22.9 billion euros). If I had to offer a new year to the economic authorities, it would be to have flexibility in their policies “, said the CEO of the International Monetary Fund (IMF), Kristalina Georgieva at the World Economic Forum (WEF) organized all in virtual for the sixth wave of the pandemic caused by the Omicron variant. The number one of the IMF also stated that “The risks to world economic activity have not stopped increasing in these first weeks and create an uncertain scenario that will require a great refinement on the part of the economic authorities to always interpret the situation correctly ”.
IMF, data on the prospects for 2022 this week
This week the IMF will present, with concrete data, the perspectives presented which included a suggestion to China that “Perhaps the time has come to review the zero Covid policy, now that we are facing a contagious variant like Omicron and that the impact of these measures on China’s growth and on China as a source of global growth is very strong ”. Georgieva’s message was sent above all to the emerging countries, indebted in dollars and exposed to US monetary policy. “The Federal Reserve – admitted Georgieva – is acting responsibly balancing the fight against price increases and the protection of the recovery but, despite this, 60% of low-income countries are at risk of debt, twice the risk of 2015“. For this reason the CEO’s advice to these countries is extend the maturities of their debts very quickly, also because the Federal Reserve has announced that it will raise interest rates in the United States at least three times and this will be disastrous for emerging countries.
IMF, in 2022 the recovery policies will be very different compared to 2020
Unlike in 2020, when the whole world, almost simultaneously, reacted to the long lockdown with aid and support this year, the problem, according to the IMF, is more complex. “We cannot apply the same policy in all countries. It has to be done specifically for each country “, argued the IMF number one. A different approach also confirmed Christine Lagarde, President of the European Central Bank (ECB). According to Lagarde, “the situation in Europe has nothing to do with the kind of price hike the US is facing.” And in this regard the president of the ECB he sees no reason to anticipate interest rate hikes “We do not see an out-of-control inflationary spiral in the euro area. We expect food and energy prices to stabilize mid-year once bottlenecks are reduced. Nor do we perceive that at the moment there are negotiations to raise wages ”.
For Lagarde, the fiscal and economic policies put in place worked
For the two economists, the increase in energy prices is due both to the strong recovery and to supply bottlenecks and geopolitical tensions, as is underway between Russia and Ukraine. The President of the ECB then confirmed that “In reality, we are victims of our own success, that of having pursued a monetary and fiscal policy that worked and a faster-than-expected vaccination process. We depend on what the data tells us but we must be humble because we underestimate the recovery, job creation and inflation ”. In Europe, monetary authorities await what will happen in the second half of the year with wage negotiations, especially in Germany. A rise in wages can cause a second impact on rising prices. Of course, the world economy seems like never before be in check of the new variants of Coronavirus.
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