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IMF chief warns of risks from a prolonged China slowdown

A prolonged slowdown in China would have substantial global spillovers, IMF Managing Director Kristalina Georgieva said, but added that Beijing has room to adjust policy to provide support. The International Monetary Fund on Tuesday cut its growth forecast for China this year to 4.4 per cent, well below Beijing’s target of around 5.5 per cent, on the risks of widespread COVID-19 lockdowns and supply chain disruptions. In a video speech to the annual Boao Forum for Asia, Georgieva said China’s actions to counter its economic slowdown are vital for the ...

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China’s spiking Covid cases, Ukraine war cloud growth in Asia, says IMF

Rising Covid cases in China and the war in Ukraine pose headwinds for Asia’s growth, the International Monetary Fund told CNBC on Wednesday. “Asia is clearly facing headwinds, both from the war in Ukraine but also from the lingering effects of Covid now being much more pronounced in China than before,” said Anne-Marie Gulde-Wolf, the acting director of the IMF’s Asia and Pacific Department. She said the outlook for Asia in 2022 had been downgraded by half a percentage point to 4.9% from the 5.4% estimate in January. In its ...

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IMF says governments must protect the vulnerable ‘when things fall apart’, avert unrest

Governments must target fiscal support to vulnerable populations hit hardest by rising energy and food prices, and now facing growing food insecurity as a result of Russia’s war in Ukraine, the International Monetary Fund (IMF) said on Wednesday. Higher food and energy prices have heightened the risks of social unrest, especially in low-income countries already struggling with high debt levels after the COVID-19 pandemic, and now facing higher borrowing costs amid interest rate hikes, the IMF said in its latest report on global fiscal developments. “Government acting in its special ...

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IMF’s Georgieva says China should stimulate consumption as lockdowns mount

International Monetary Fund Managing Director Kristalina Georgieva said that China should use fiscal space to stimulate consumption as it faces an economic slowdown prompted by renewed COVID-19 lockdowns. Georgieva said that China had ample fiscal and monetary policy space to counteract this, but it would be better to stimulate consumption. “What we see in China is that consumption is falling short, it is not recovering as strongly as necessary,” Georgieva told a news conference at the International Monetary Fund and World Bank spring meetings. “So rather than moving money into ...

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Financial Stability Risks Grow as War Complicates Push to Contain Inflation

Russia’s invasion of Ukraine raises financial stability risks for the world and poses questions about the longer-term impact on economies and markets. The war, amid an already slowing recovery from the pandemic, is set to test the resilience of financial markets and poses a threat to financial stability as discussed in our latest Global Financial Stability Report. Ukraine and Russia face the most pressing risks. Yet it is already clear that the severity of disruptions in commodity markets and to supply chains are creating downside risks by weighing adversely on ...

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IMF official says split into competing systems would be ‘disaster’ for global economy

The world is on a path to a more multipolar world given the rise of emerging markets in the global economy, but it would be disastrous if the global economy fragmented into competing systems with different standards, a top IMF official said. International Monetary Fund chief economist Pierre-Olivier Gourinchas told reporters that a managed transition to a more multipolar world would be a preferable outcome since it would maintain and protect gains realized globalization. “One scenario is one where we have divided blocs that are not tarding much with each ...

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Emerging-Market Banks’ Government Debt Holdings Pose Financial Stability Risks

The pandemic has left emerging-market banks holding record levels of government debt, increasing the odds that pressures on public-sector finances could threaten financial stability. Authorities should act quickly to minimize that risk. Governments around the world have spent aggressively to help households and employers weather the economic impact of the pandemic. Public debt has mounted as governments have issued bonds to cover their budget deficits. The average ratio of public debt to gross domestic product—a key measure of a country’s fiscal health—rose to a record 67 percent last year in ...

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Private Debt to Weigh on Global Economic Recovery

Governments succeeded in lessening the economic pain of the pandemic by providing plenty of liquidity to stricken consumers and businesses through credit guarantees, concessional lending and moratoriums on interest payments. But although these policies proved effective in supporting balance sheets, they also led to a spike in private debt, extending a steady increase in leverage spurred by supportive financial conditions since the global financial crisis of 2008. Global private debt surged by 13 percent of the world’s gross domestic product in 2020—faster than the rise seen during the global financial ...

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IMF cuts global growth forecast due to “seismic waves” from Russia’s war in Ukraine

The International Monetary Fund on Tuesday slashed its forecast for global economic growth by nearly a full percentage point, citing Russia’s war in Ukraine, and warning that inflation was now a “clear and present danger” for many countries. The war is expected to slow growth and further increase inflation, the IMF said in its latest World Economic Outlook, while warning that its forecast was marked by “unusually high uncertainty.” Further sanctions on Russian energy and a widening of the war, a sharper-than-forecast deceleration in China and a renewed flare-up of ...

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Ukraine conflict to test resilience of global financial system: IMF

Russia’s invasion of Ukraine has driven up financial stability risks “on several fronts” and will test the resilience of the global financial system at a time when interest rates are rising sharply, the International Monetary Fund (IMF) warned in its biannual Global Financial Stability Report on Tuesday. While there has so far been no globally systemic financial event, there are several channels through which the Ukrainian turmoil could be amplified across the system, the IMF warned. Those include banks’ and non-banks’ direct and indirect exposures to Russia; commodity market disruptions ...

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COVID-19 assistance to developing countries lifts foreign aid in 2021 – OECD

Foreign aid from official donors rose to an all-time high of USD 179 billion in 2021, up 4.4% in real terms from 2020 as developed countries stepped up their help for developing countries grappling with the COVID-19 crisis, according to preliminary data collected by the OECD. © DAC Statistics (2022) – COVID-19 assistance to developing countries lifts foreign aid in 2021 (graph)Official Development Assistance (ODA) provided by members of the OECD’s Development Assistance Committee (DAC) in 2021 included USD 6.3 billion spent on providing COVID-19 vaccines to developing countries, equivalent ...

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Dangerous Global Debt Burden Requires Decisive Cooperation

We live in dangerous times. The world faces renewed uncertainty, as war comes on top of an ever-changing and persistent pandemic, now in its third year. Moreover, problems that predated COVID-19 have not gone away. When policymakers return to Washington in the coming days for the Spring Meetings of the IMF and World Bank, one of the central topics will be growing debt vulnerabilities in the world. Debt was already very high before the first coronavirus lockdowns. As the pandemic hit, unprecedented peacetime economic support stabilized financial markets and gradually ...

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IMF hopes to mobilize $45 billion for new trust to aid broader range of countries

The International Monetary Fund hopes to mobilize around $45 billion for a new trust to help a broader range of countries, including some middle-income economies, deal with climate change and other longer-term challenges, a paper prepared by IMF staff and reviewed by Reuters shows. The IMF’s executive board is expected on Wednesday to approve plans for the new Resilience and Sustainability Trust (RST) that were hammered out by IMF staff after the Group of 20 major economies backed creation of the instrument in October. Nearly three-quarters of the IMF’s 190 ...

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IMF expects ‘significant’ pledges for new climate, pandemics trust

The International Monetary Fund expects to members to make “significant” pledges of support for its newly approved Resilience and Sustainability Trust during the IMF-World Bank spring meetings beginning this week, a senior IMF official said. The IMF’s board approved creation of the new trust last week to help low-income and most middle-income countries deal with longer-term challenges such as climate change and pandemics, with a goal of raising at least $45 billion. Craig Beaumont, deputy director of the IMF’s Finance Department, said officials expected significant pledges to come in, although ...

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Zelenskiy, IMF managing director discuss Ukraine’s ‘post-war reconstruction’

Ukrainian President Volodymyr Zelenskiy said on Sunday he spoke with IMF Managing Director Kristalina Georgieva about Ukraine’s financial stability and the country’s post-war reconstruction. “Discussed with IMF Managing Director Georgieva the issue of ensuring Ukraine’s financial stability & preparations for post-war reconstruction. We have clear plans for now, as well as a vision of prospects. I’m sure cooperation between the IMF & Ukraine will continue to be fruitful,” Zelenskiy said in a tweet. Ukrainian Prime Minister Denys Shmyhal said earlier he will attend the International Monetary Fund and World Bank ...

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