Category Archives: International Monetary Fund (IMF)

Most difficult global outlook since 1930s heralds end of US-led world order | Larry Elliott

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IMF has revised up growth forecasts but medium-term prospects remain poor as globalisation goes into reverse

The 2020s are almost halfway over and are on course to be the most difficult decade for the global economy since the 1930s. Every finance minister and central bank governor at the spring meeting of the International Monetary Fund in Washington last week knows that, even if they were not prepared to admit it publicly.

The IMF likes to look on the bright side. It revised up slightly its forecast for global growth and now thinks scarring from the coronavirus pandemic and the cost of living crisis will be less severe than it originally feared. Interest rates have risen without triggering the recessions that were predicted. A soft landing has been finessed. The performance of some countries – the US and India to take two examples – has been strong.

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Australia rises to second in world budget management rankings, IMF data shows

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Treasurer and finance minister hail ‘remarkable achievement’ as monitor finds balance to be behind only Canada among G20 countries

Australia’s overall budget balance is the second strongest among G20 nations, behind only Canada, according to the International Monetary Fund’s latest fiscal monitor.

The IMF’s half-yearly update, released on Wednesday night, found Australia’s overall budget balance came in at -0.9% of gross domestic product in 2023, with only Canada’s budget position (-0.6%) faring better.

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Middle East conflict risks sharp rise in oil prices, says IMF

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In the UK, anxiety over the crisis after Iran’s missile strike on Israel drives down UK shares

An escalating Middle East conflict risks leading to higher oil prices, a reversal of the recent fall in inflation and a puncturing of the optimistic mood in financial markets, the International Monetary Fund has warned.

The Washington-based IMF said it was closely monitoring events in the region after Iran’s missile strike on Israel at the weekend and stressed the possibility that a war between the two countries could lead to higher interest rates.

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The US could be facing a 2008-style financial crisis. Why does Sunak want to copy it?

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The PM’s admiration for Washington’s economic model may backfire amid looming US banking and stock market disasters

One of the consistent themes of the Conservative economic narrative is an admiration for the US and its ability to grow quickly. The way it has bounced back from the pandemic and how it has ridden out the impact of Russia’s invasion of Ukraine should serve as a blueprint.

A neoliberal Conservative analysis puts the emphasis on tech, innovation and a myth-like entrepreneurial spirit that the UK would do well to emulate. What it ignores is the way the US economy zips ahead on fantastical stock market valuations and off-balance-sheet accounting reminiscent of the years before the 2008 financial crisis. And how both these habits could bite back in a big way, much as they did in 2008, and pretty soon.

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Kristalina Georgieva wins backing to run for second term as IMF chief

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Bulgaria’s ‘eternal optimist’ in favour with European finance ministers after first five-year stint encompassing Covid and Ukraine

The head of the International Monetary Fund, Kristalina Georgieva, will run for a second five-year term after being nominated by a string of European countries to lead the global lender.

The Bulgarian economist and champion of policies to tackle the climate crisis will be given the support of her home country, which said she had accepted the nomination for another term starting in September.

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Jeremy Hunt suggests tax cuts in budget won’t match last year’s £20bn giveaway – UK politics live

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The chancellor said he wanted to manage people’s expectations ahead of the spring budget

The UK needs a government guided by clear purpose, Reeves says.

Labour has set out five missions. But they are all tied to the economic mission – to raise growth.

These are the symptoms of economic decline.

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AI will affect 40% of jobs and probably worsen inequality, says IMF head

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‘Crucial’ that countries build social safety nets to mitigate impact on workers, says Kristalina Georgieva

Artificial intelligence will affect 40% of jobs around the world and it is “crucial” that countries build social safety nets to mitigate the impact on vulnerable workers, according to the head of the International Monetary Fund.

AI, the term for computer systems that can perform tasks usually associated with human levels of intelligence, is poised to profoundly change the global economy with advanced economies at greater risk of disruption.

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Argentina’s new government devalues peso by more than 50%

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Package of spending cuts introduced in attempt to tackle country’s worst economic crisis in decades

Argentina has devalued its currency, the peso, by more than 50% as part of a package of large-scale spending cuts intended to address the country’s worst economic crisis in decades.

The plans, introduced under the newly inaugurated administration of Javier Milei, include cutting energy subsidies and cancelling tenders for public works.

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IMF clings to a hopeful agenda as crisis follows crisis

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At the fund’s annual meeting this week in Morocco, ambitions for climate and debt relief may be overwhelmed by events – again

Last week’s turmoil in the global bond markets will be playing on the minds of finance ministers and central bank governors when they gather in Marrakech this week for the annual meetings of the International Monetary Fund and the World Bank.

After the triple shocks of the Covid pandemic, the war in Ukraine and the surge in inflation, the mood may be less febrile than it was a year ago, but few if any of those travelling to Morocco – which suffered a devastating earthquake last month – would dare say that the crisis era is over. Most will be wondering what might go wrong next.

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UK interest rates need to stay higher for longer to beat inflation, says IMF

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US Fed will also have to raise rates more aggressively than forecast, says Washington-based body

Interest rates in the UK will need to stay higher for longer than previously forecast in order to tackle stubbornly high inflation, the International Monetary Fund has warned.

The IMF’s regular update on the state of the global economy singled out the US Federal Reserve and the Bank of England as two central banks that will need to raise official borrowing costs more aggressively than it assumed only three months ago.

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Paris finance reforms could untie poor countries’ hands in climate crisis

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Changes to the World Bank could unlock developing states access to loans and to the means of staving off disaster

The Netherlands has almost the same amount of solar generating capacity as the whole continent of Africa. That must be, in part, because the interest on a loan to set up a windfarm in Africa is about 17% more than one to do the same in Europe.

Many poor countries enjoy vast natural resources of wind and sun yet struggle to access renewable energy because of the crippling cost of capital imposed on them. Private sector companies perceive far greater risk in poor countries, penalising most heavily the countries in greatest need of investment.

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IMF calls for ‘another Gleneagles moment’ on debt relief and aid

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Package similar to 2005 deal needed as struggling African countries suffer severe funding squeeze, says official

Western countries need to put together a debt relief and aid package to match that of the landmark Gleneagles summit deal in 2005 in order to counter a severe funding squeeze affecting struggling African countries, the International Monetary Fund has said.

Abebe Selassie, the director of the IMF’s African department, said without a scaling up of financial support some of the world’s poorest countries would have no chance of meeting the 2030 UN goals for poverty reduction.

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Water ban in drought-stricken Tunisia adds to growing crisis

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Risk of unrest rises amid fourth dry year, poor grain harvest, weak economy and likely food subsidy cuts

Tunisia has introduced water rationing as the country suffers its fourth year of severe drought.

The state water distribution company, Sonede, has already begun cutting mains water supplies every night between 9pm and 4am. The agriculture ministry has now banned the use of water for irrigation, watering green spaces and other public areas, and for washing cars.

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Pakistan’s fresh £580m loan from China intensifies debt burden fears

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Loan is on top of £25bn that cash-strapped Islamabad already owes Beijing and Chinese commercial banks

China has agreed to loan Pakistan $700m (£580m) to help it weather its worst economic crisis in a generation, in a development that will intensify concern among western countries about cash-strapped Islamabad’s debt burden to Beijing.

The loan comes on top of $30bn (£25bn) that Pakistan already owes China and Chinese commercial banks. Securing the financing will help to unlock bailout cash from the International Monetary Fund (IMF).

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Weaker economy, higher inflation: Bank of England’s dilemma

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Differing experts have urged the Monetary Policy Committee to both cut interest rates and to raise them

Turn up. Take the temperature of the economy. Raise interest rates. That’s the been the pattern from the responsible technocrats at the Bank of England for more than a year now – and they show no sign of stopping.

Between the depths of the global financial crisis in March 2009 and the start of the Covid-19 pandemic, interest rates were changed only five times, and three of those were in response to unexpected shocks: one after the Brexit vote in 2016, and two at the arrival of the pandemic in 2020. There was one period of more than seven years when interest rates were pegged at 0.5%.

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World Bank walking tightrope as it mulls increased lending to poorest

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Campaigners say bank should rush to rescue countries facing recession – but can it do so without resulting in mass debt write-offs?

Not since the early 1990s has the world faced such a period of low growth.

Discounting the havoc caused by the financial crash of 2008 and the initial impact of the Covid-19 pandemic, the World Bank says that by the end of 2024 it will have been 30 years since the global economy grew at an average of less than 2% a year.

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China circles El Salvador’s economy as country edges toward crypto plunge

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President Nayib Bukele bet on bitcoin and its tumbling value has put the Central American country in a financially precarious spot

As crypto-Twitter cascaded with apocalyptic memes about the bankruptcy of cryptocurrency exchange FTX and the sharp drop in the bitcoin price, one account has remained notably silent on the topic.

Unlike in previous crashes, the president of El Savlador, Nayib Bukele, who made bitcoin legal tender a year ago, did not exhort his followers to “buy the dip”. The laser eyes, popular among crypto currency traders, have long since been removed from his Twitter profile.

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Tory backer says UK economy is ‘frankly doomed’ without Brexit renegotiation

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Guy Hands says Conservatives are putting country ‘on a path to be sick man of Europe’

The billionaire businessman Guy Hands has accused the Conservatives of putting the UK “on a path to be the sick man of Europe”, as he issued a series of stark predictions about what could lie ahead for the post-Brexit economy, including higher taxes and interest rates and fewer social services.

The founder and chair of the private equity firm Terra Firma, a longtime Tory supporter, called for the government to renegotiate Brexit, stating that otherwise the British economy was “frankly doomed”.

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Pound falls sharply against dollar after Bank confirms bond-buying end date

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Sterling falls more than a cent to below $1.10 after Andrew Bailey tells pension firms they have ‘got to get this done’

The pound has fallen sharply against the dollar after Andrew Bailey warned the Bank of England would not extend its emergency intervention in financial markets beyond this week, after the turmoil sparked by the government’s mini-budget.

Sterling skidded by more than a cent against the dollar to below $1.10 after the Bank’s governor insisted the £65bn scheme to purchase UK government bonds would not be continued beyond the deadline on Friday.

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Half of poorest countries have cut health spending despite Covid, says Oxfam

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Analysis of budgets finds rich nations, including UK, ‘exacerbated explosion of economic inequality’

Many of the world’s poorest countries have cut health spending during the last two years, sometimes to make debt repayments to rich creditors, according to a report by Oxfam that shows inequality between rich and poor nations worsening during the coronavirus pandemic.

Analysis of national budgets across 161 nations found that despite the biggest global health emergency in a century, half of low- and lower-middle-income countries cut health spending, while almost half cut their welfare budgets and almost three-quarters cut education spending.

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