As the global economy enters a period of rising inflation, the IMF warned Tuesday, urging central banks to remain “vigilant” and take immediate action to stabilize monetary policy.
The fund outlined new risks in its two-year World Economic Outlook, which also warned of a slowdown in global economic recovery after a successful recovery this year.
Gita Gopinath, chief financial officer at the IMF, said the economic downturn meant it was too early to “say anything about the economy”, despite the lack of other factors that have also exacerbated the economic downturn.
“We are always aware that the emergence of this fraud is that the misunderstanding required on the issue can lead to problems,” he told the Financial Times.
“It was hoped that by the end of the season, it would be out of control.”
The IMF’s central position is that inflation will rise sharply by the end of the year, slightly in the middle of 2022 and then return to the epidemics before. But the report also said that “the risk of inflation is not being met” and advised central banks to take action if inflation problems prove to be sustainable.
The fund said central banks should ignore the high prices that come with power outages or temporary difficulties in bringing trade to market. But it needs to take action if there are indications that companies, families or employees are beginning to expect a slowdown in the economy.
“What [central banks] monitoring with secondary results [with] this increases with the price of electricity paying the price and then feeding the higher prices. That’s when you need to be careful, “said Gopinath.
The report clearly stated that “central banks. . . they need to be prepared to act quickly if recovery is faster than expected or when the risks of inflation become apparent ”.
This means that we can move forward in price even though employment is still weak, the IMF recommended, as doing so would allow economic prices to grow.
“Suspicion could lead to financial institutions paying back themselves and this would help prevent central banks struggling to avoid work without delay in enforcing the policy,” the IMF warned.
If the central banks are able to cope with future challenges, the fund expects more resources to fully recover from the epidemic, returning to the way it was before the coronavirus hit.
To protect the integrity of the IMF’s predictions following the falsification of the International Bank system Kristalina Georgieva, who is now the head of the fund, was their chief, Gopinath said the World Bank’s crisis was “not in line with the IMF”.
“We have a solid and well-documented plan as we have seen, while we have a number of financial experts in a number of departments who are reviewing and commenting extensively.”
Financial forecasts have not really changed from what happened in April. The IMF expects the global economy to grow 5.9% by 2021, down to 4.9% next year.
Economic growth in developing countries is expected to reach 2.8% this year, followed by a decrease of 2.3% in 2022. However, inflation is set at 1.2% and 0.6 percent respectively since April, indicating a new growth in inflation risk.
The International Monetary Fund (IMF) has said that even after the epidemic has ended, developing and low-income countries will suffer greatly in the future.
With the exception of China, it is expected that by 2024 it will be 10% lower than expected before the epidemic.