IMF sees global economy improving despite uncertainties - FRANCE 24

Economy

IMF sees global economy improving despite uncertainties – FRANCE 24

Published

3 years ago

March 30, 2021

Harry Miller

Issued on: 30/03/2021 – 17:26Modified: 30/03/2021 – 17:24

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Washington (AFP)

Economic growth led by the United States and China is accelerating, amplifying the risks of an uneven global recovery, the head of the IMF said Tuesday.

“In January we projected global growth at 5.5 percent in 2021,” said IMF Chief Kristalina Georgieva in an address ahead of the body’s annual spring meeting cohosted with the World Bank.

“We now expect a further acceleration,” she said ahead of the international organization’s official update of its forecast in a week.

Key factors in the improved outlook includes the US passage of President Joe Biden’s $1.9 trillion economic relief package and an expected bounce from coronavirus vaccines increasingly available in larger economies, Georgieva said.

She also praised the “extraordinary effort” of workers throughout the health care universe, including doctors, nurses and vaccine scientists.

Governments played a key role in averting a worldwide depression, Georgieva said, with some $16 trillion in fiscal support and a “massive liquidity injection by central banks” averting complete disaster.

Without these steps, the worldwide economic contraction of 3.5 percent in 2020 “would have been at least three times worse,” she said.

– ‘Extremely high uncertainty’ –

But the IMF is seeing increasing signs of a “multi-speed recovery” powered by the United States and China, which are on track to enjoy growth by the end of 2021 that outpaces their pre-crisis performance.

In general, the global outlook remains clouded by “extremely high uncertainty,” with economic activity still tied closely to the pandemic.

“So much depends on the path of the pandemic — which is now shaped by uneven progress in vaccination and the new virus strains that are holding back growth prospects, especially in Europe and Latin America,” she said.

Especially vulnerable are emerging markets with more “fragile” government.

“Many are highly exposed to hard-hit sectors, such as tourism,” she said. “Now they face less access to vaccines and even less room in their budgets.”

A keen worry in a global economy fractured by different-paced recoveries would be a sudden rise in US growth that leads to a jump in interest rates and capital flight from emerging regions.

“We expect inflation to remain contained, but faster US recovery could cause a rapid rise in interest rates, which could lead to a sharp tightening of financial conditions — and significant capital outflows from emerging and developing economies,” she said.

Georgieva urges generous investment in the production and distribution of vaccines to facilitate the transition to the post-Covid economy.

She also backs increased investment for the most vulnerable countries, as well as spending on infrastructure, health and education so that “everyone can benefit from the historic transformation to greener and smarter economies.”

This group of nations requires $200 billion over five years to overcome the pandemic and another $250 billion to return to a trajectory of meeting richer countries, said Georgieva, citing a recent IMF study.

The IMF has already provided $107 billion in financing and debt service relief for the 29 nation poorest nations. This includes support for sub-Saharan Africa at about 13 times the level previously.

Support within the international organization is also building for lending some $650 billion in special drawing rights to aid the most vulnerable nations, she said.

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Economy

China Wants Everyone to Trade In Their Old Cars, Fridges to Help Save Its Economy – Bloomberg

Published

2 hours ago

April 24, 2024

Harry Miller

China’s world-beating electric vehicle industry, at the heart of growing trade tensions with the US and Europe, is set to receive a big boost from the government’s latest effort to accelerate growth.

That’s one takeaway from what Beijing has revealed about its plan for incentives that will encourage Chinese businesses and households to adopt cleaner technologies. It’s widely expected to be one of this year’s main stimulus programs, though question-marks remain — including how much the government will spend.

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Economy

German Business Outlook Hits One-Year High as Economy Heals – BNN Bloomberg

Published

3 hours ago

April 24, 2024

Harry Miller

(Bloomberg) — German business sentiment improved to its highest level in a year — reinforcing recent signs that Europe’s largest economy is exiting two years of struggles.

An expectations gauge by the Ifo institute rose to 89.9. in April from a revised 87.7 the previous month. That exceeds the 88.9 median forecast in a Bloomberg survey. A measure of current conditions also advanced.

“Sentiment has improved at companies in Germany,” Ifo President Clemens Fuest said. “Companies were more satisfied with their current business. Their expectations also brightened. The economy is stabilizing, especially thanks to service providers.”

A stronger global economy and the prospect of looser monetary policy in the euro zone are helping drag Germany out of the malaise that set in following Russia’s attack on Ukraine. European Central Bank President Christine Lagarde said last week that the country may have “turned the corner,” while Chancellor Olaf Scholz has also expressed optimism, citing record employment and retreating inflation.

There’s been a particular shift in the data in recent weeks, with the Bundesbank now estimating that output rose in the first quarter, having only a month ago foreseen a contraction that would have ushered in a first recession since the pandemic.

Even so, the start of the year “didn’t go great,” according to Fuest.

“What we’re seeing at the moment confirms the forecasts, which are saying that growth will be weak in Germany, but at least it won’t be negative,” he told Bloomberg Television. “So this is the stabilization we expected. It’s not a complete recovery. But at least it’s a start.”

Monthly purchasing managers’ surveys for April brought more cheer this week as Germany returned to expansion for the first time since June 2023. Weak spots remain, however — notably in industry, which is still mired in a slump that’s being offset by a surge in services activity.

“We see an improving worldwide economy,” Fuest said. “But this doesn’t seem to reach German manufacturing, which is puzzling in a way.”

Germany, which was the only Group of Seven economy to shrink last year and has been weighing on the wider region, helped private-sector output in the 20-nation euro area strengthen this month, S&P Global said.

–With assistance from Joel Rinneby, Kristian Siedenburg and Francine Lacqua.

(Updates with more comments from Fuest starting in sixth paragraph.)

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Economy

Parallel economy: How Russia is defying the West’s boycott

Published

9 hours ago

April 23, 2024

Harry Miller

When Moscow resident Zoya, 62, was planning a trip to Italy to visit her daughter last August, she saw the perfect opportunity to buy the Apple Watch she had long dreamed of owning.

Officially, Apple does not sell its products in Russia.

The California-based tech giant was one of the first companies to announce it would exit the country in response to Russian President Vladimir Putin’s full-scale invasion of Ukraine on February 24, 2022.

But the week before her trip, Zoya made a surprise discovery while browsing Yandex.Market, one of several Russian answers to Amazon, where she regularly shops.

Not only was the Apple Watch available for sale on the website, it was cheaper than in Italy.

Zoya bought the watch without a moment’s delay.

The serial code on the watch that was delivered to her home confirmed that it was manufactured by Apple in 2022 and intended for sale in the United States.

“In the store, they explained to me that these are genuine Apple products entering Russia through parallel imports,” Zoya, who asked to be only referred to by her first name, told Al Jazeera.

“I thought it was much easier to buy online than searching for a store in an unfamiliar country.”

Nearly 1,400 companies, including many of the most internationally recognisable brands, have since February 2022 announced that they would cease or dial back their operations in Russia in protest of Moscow’s military aggression against Ukraine.

But two years after the invasion, many of these companies’ products are still widely sold in Russia, in many cases in violation of Western-led sanctions, a months-long investigation by Al Jazeera has found.

Aided by the Russian government’s legalisation of parallel imports, Russian businesses have established a network of alternative supply chains to import restricted goods through third countries.

The companies that make the products have been either unwilling or unable to clamp down on these unofficial distribution networks.

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