The International Monetary Fund (IMF) reported that the global economy slightly outpaced its growth forecasts in the first quarter, but the data showed a mixed picture with signs of slowing momentum as well as areas of resistance.
The IMF published the “G20 Observation Note” report before the G20 Finance Ministers and Central Bank Governors Meeting to be held in Gandhinagar, India on July 17-18.
In the report, it was stated that the global economy was going through a difficult period and that the first quarter of this year surprised positively according to the World Economic Outlook report published in April.
Pointing out that since then, indicators have drawn a mixed picture with signs of slowing momentum, as well as areas of resistance, the report noted that China’s recovery rate slowed down after the sharp recovery in the first quarter of this year.
Disinflation efforts will likely take time
In the report, it was stated that there are signs that the tighter monetary policy is reflecting on financial conditions, and it was stated that inflation eased a little but remained high and disinflation efforts would probably take time.
Reminding that the financial balances improved last year, it was stated in the report that the fiscal space continued to be limited and the public debt burdens were expected to increase.
In the report, it was emphasized that the risks are mostly on the downside, and it was noted that the G-20 policy makers will need to continue the fight against inflation by taking the risks into account.
“Especially in developed economies, inflation is well above the targets”
IMF Managing Director Kristalina Georgieva, in her blog post titled “Weak Global Economy, High Inflation and Increasing Decoupling Require Strong G20 Action”, wrote that finance ministers and central bank governors will meet next week to address economic divergence, growth and high inflation. stated that they will seek joint action.
Recalling that the IMF’s global economic growth forecast for this year, announced in April, is 2.8 percent, Georgieva said, “Recent high-frequency indicators paint a mixed picture, contrasting with weakness in manufacturing, resilience in the service sector in G20 countries, and strong labor markets in advanced economies. ” made its assessment.
Georgieva stressed that the financial vulnerabilities created by tight monetary policy require careful management, especially as restoring price stability remains a priority.
Stating that global headline inflation seems to have peaked and core inflation has eased a bit, Georgieva said, “However, in most G20 countries, especially in developed economies, inflation is well above the targets of central banks.” used the phrases.
Georgieva emphasized that it is vital to maintain the course of monetary policy and closely monitor financial sector risks until inflation is permanently reduced to the target.
Noting that the IMF’s 3 percent medium-term global growth forecast is well below the historical average of 3.8 percent in the 2000-2019 period, Georgieva said that economic disintegration will both harm growth and tackle urgent global challenges from rising debt crises to the threat posed by climate change. He said it would make it harder.