The world must cut greenhouse gas emissions by at least a quarter before the end of this decade to achieve carbon neutrality by 2050. Progress needed toward such a major shift will inevitably impose short-term economic costs, though these are dwarfed by the innumerable long-term benefits of slowing climate change. In our latest World Economic Outlook, we estimate the near-term impact of different climate mitigation policies on output and inflation. If the right measures are implemented immediately and phased in over the next eight years, the costs will be small. ...

The International Monetary Fund should issue $650 billion in new emergency reserves to help its member countries grapple with overlapping health, food, energy and inflation crises, 140 civil society groups said in a letter to the IMF’s board this week. IMF officials in July said a fresh issuance of Special Drawing Rights (SDR) reserves was among the options for aiding countries struggling with spillovers from Russia’s war in Ukraine, but there were no active discussions on the matter. The World Bank warned last month of the growing risk of a ...

The International Monetary Fund will next week downgrade its forecast for 2.9% global growth in 2023, Managing Director Kristalina Georgieva said on Thursday, citing rising risks of recession and financial instability. Georgieva said the outlook for the global economy was darkening given the shocks caused by the COVID-19 pandemic, Russia’s invasion of Ukraine and climate disasters on all continents, and it could well get worse. “We are experiencing a fundamental shift in the global economy, from a world of relative predictability … to a world with more fragility – greater ...

New research by the International Monetary Fund shows that sustained wage-price spirals are historically rare, and recent sharp interest rate hikes by central banks are likely to help prevent high inflation expectations from becoming entrenched. In an analytical chapter released on Wednesday from the IMF’s forthcoming World Economic Outlook, the Fund said wage and price hike dynamics in 2020 and 2021 were driven by “highly unusual” COVID-19 pandemic shocks, unlike past episodes that reacted to more conventional economic forces. IMF researchers studied 22 episodes of high inflation and falling real ...

Germany needs to adopt a more agile, risk-tolerant and experimental approach to innovation policy if it is to continue to lead in its historical core industries such as automotive manufacturing, machinery, chemicals and pharmaceuticals, and be a champion of the industries of tomorrow, according to a new OECD report. The OECD Review of Innovation Policy: Germany says the COVID-19 pandemic and the effects of Russia’s war on Ukraine have highlighted vulnerabilities in Germany’s economic model: an overreliance on fossil fuels, delayed digitalisation and under-diversified supply chains. This comes as the ...

The International Monetary Fund said on Monday that up to 20 countries, many in Africa, could need emergency assistance to cope with the global food crisis. IMF Managing Director Kristalina Georgieva, speaking at a conference in Saudi Arabia, also said that 141 million people across the Arab world are exposed to food insecurity. The IMF on Friday approved a new food shock borrowing window under its existing emergency financing instruments to help vulnerable countries cope with food shortages and high costs stemming from Russia’s war in Ukraine. Georgieva said that ...

Year-on-year inflation in the OECD as measured by the Consumer Price Index (CPI) was broadly stable in August 2022, reaching 10.3%, after 10.2% in July and 10.3% in June (Figure 1). Between July and August 2022, headline inflation decreased in 16 of 38 OECD countries mainly driven by slower increases in energy prices. However, 15 OECD countries continued to record double-digit inflation in August 2022, with the highest rates observed in Estonia, Latvia, Lithuania and Türkiye (all above 20%). Energy price inflation in the OECD fell to 30.2% year-on-year in ...

The International Monetary Fund’s (IMF) executive board will consider Ukraine’s request for $1.3 billion in additional emergency funding on Friday as Russia’s war against the country continues, two sources familiar with the matter said. IMF staff have prepared the necessary documents and believe Ukraine has received sufficient financial assurances from its global partners to meet the IMF’s debt sustainability requirements and qualify for further emergency funds, the sources told Reuters. If approved, the funds would come from a new emergency lending program to address food shortages approved by the board ...

Global recession can be avoided if governments’ fiscal policies were consistent with monetary policy tightening, but likely there would be countries falling into recession next year, the International Monetary Fund’s managing director said. In the context of monetary policy tightening, fiscal policy cannot stay idle because the cost of living crisis is hitting parts of society dramatically, Kristalina Georgieva said. “We do need central banks to act decisively. Why, because inflation is very stubborn… It is bad for growth and it is very bad for poor people. Inflation is a ...

A new government in the UK put forth a fiscal plan last month that included steep tax cuts. The proposal rattled the financial markets and caused the value of the British pound to plummet, with many critics voicing concern that the plan would increase the UK’s debt. This week, the UK government announced it will drop the controversial tax plan. One such skeptic of the tax cuts was the International Monetary Fund (IMF), which released a public statement urging the UK to “reevaluate” its plan. “Given elevated inflation pressures in ...

Food insecurity has been rising since 2018. Even before Russia’s invasion of Ukraine, the increasing frequency and severity of climate shocks, regional conflicts and the pandemic were all taking their toll, disrupting food production and distribution, and driving up the cost of feeding people and families. The situation took an even more dramatic turn with the war in Ukraine. This pushed the prices of food and fertilizers higher still—hurting importers and prompting several countries to impose export restrictions. The result is an unprecedented 345 million people whose lives and livelihoods ...

The International Monetary Fund (IMF) and ratings agency Moody’s criticised Britain’s new economic strategy, as investors braced for more havoc in bond markets that has already forced the Bank of England to promise “significant” action. The statements overnight from the IMF and Moody’s piled more pressure on new finance minister Kwasi Kwarteng to reassess his policy, which sparked a collapse in the value of British assets in recent days. New British Prime Minister Liz Truss of the Conservative Party came into office on Sept. 6 saying she wanted to snap ...

The International Monetary Fund on Tuesday took aim at new British financial plans that have roiled markets, warning that “large and untargeted fiscal packages” would likely increase inequality in Britain and could undermine monetary policy. In its first comments on plans by Britain’s new finance minister Kwasi Kwarteng, which have sent sterling and bonds into free fall, the IMF urged UK authorities to consider providing more targeted support to families and business instead of sizable tax cuts and sharply higher government spending. “We are closely monitoring recent economic developments in ...

Global economic growth is slowing more than was forecast a few months ago in the wake of Russia’s invasion of Ukraine, as energy and inflation crises risk snowballing into recessions in major economies, the OECD said on Monday. While global growth this year was still expected at 3.0%, it is now projected to slow to 2.2% in 2023, revised down from a forecast in June of 2.8%, the Organisation for Economic Cooperation and Development said. The Paris-based policy forum was particularly pessimistic about the outlook in Europe – the most ...

The global economy has lost momentum in the wake of Russia’s war of aggression in Ukraine, which is dragging down growth and putting additional upward pressure on inflation worldwide, according to the OECD’s latest Interim Economic Outlook. The Outlook projects global growth at a modest 3% this year before slowing further to just 2.2% in 2023. This is well below the pace of economic growth projected prior to the war and represents around USD 2.8 trillion in foregone global output in 2023. The war has further pushed up energy prices, ...