"A solid economic recovery is hard to come by"warns the International Monetary Fund

First modification: 04/11/2023 – 04:32

Both the International Monetary Fund and its sister lending agency, the World Bank, believe that the global economy will grow less this year than it did in 2022, with an ongoing debt crisis in emerging economies, unstoppable inflation and interest rates that seem to have no ceiling.

This week, its leaders are hosting policymakers in the US capital to discuss the most pressing problems of the global economy. The outlook looks dark, or at least not as clear as a few months ago.

On the one hand, the IMF expects the world economy to grow less than 3% this yeardown from 3.4% last year, increasing the risk of hunger and poverty globally. The World Bank, more pessimistic, estimates 2%.

For the managing director of the International Monetary Fund, Kristalina Georgieva, “a solid recovery remains elusive” due to “a significant inflation problem.”

“That means central banks need to continue to keep interest rates higher to combat it, and that is on the way to restoring prospects for strong growth,” he added.

Japan: a central bank that swims against the current

The Central Bank of Japan is one of the most unorthodox in the world and has chosen to keep its interest rates ultra-low, contrary to what its colleagues are doing. Its target inflation, as in other countries, is 2% per year and in 2022 it closed at 2.3%, its highest level in eight years.

Although many believe that it is a success story, others stress that this strategy has brought side effects such as the strong devaluation of the yen against other currencies.

This Monday began the mandate of the new governor of the Japanese issuer, Kazuo Ueda, who anticipated that “the Bank of Japan has taken several measures to mitigate the cost of negative rates. Therefore, given that inflation has not yet reached 2% it is appropriate to keep those rates negative.

With AP, Reuters and EFE