He International Monetary Fund (IMF)) warned on Tuesday that the global economy is languishing, with growth of 2.8% this year, and 3% over the next five years, the lowest in decades.
In updating your World economy perspectivesThe agency described the situation as “anemic”, although it expects the main economic regions to avoid a recession. About USAimproved its forecasts, estimating that it should grow 1.6% in 2023 and 1.1% in 2024.
“The anemic outlook” is a reflection of the rise in interest rates and the “tight policies necessary to reduce inflation,” said the IMF, which added to the deterioration of financial conditions, the war in Ukraine and “the fragmentation of geoeconomic growth”, as other causes.
According to the report, the outlook for the global economy could be worse with a “plausible alternative scenario, with more stress on the financial sector.” In this assumption, growth would fall to around 2.5% in 2023, making it the weakest since the 2001 crisis if the year of the pandemic and the global financial collapse of 2009 are excluded.
Inflation, rates and an anemic outlook
The IMF warned about the secondary effects of contractive monetary policies to contain the inflationalthough he once again defended that path as the correct one.
“The effects that monetary tightening may have on the financial sector may seem worrying, we have repeatedly emphasized that the fight against inflation will not be an easy path to follow,” said the IMF chief economist, Pierre-Olivier Gourinchaswhen presenting the report, in reference to the bankruptcy of Silicon Valley Bank (SVB) and the hasty purchase of Credit Suisse by his rival UBS.
Globally, the IMF forecasts high inflation, around 7%. However, he considered that although “the massive response from most central banks is beginning to bring inflation closer to its 2% target, in some countries it did not reach its peak, which could make it necessary to go further in the future.” monetary tightening“.
The IMF forecast for Uruguay
The International Monetary Fund forecast an economic slowdown and a 2% growth as a consequence of the drought that hit Uruguay in recent months.
In its periodic evaluation, known as Article IV and published on March 20, the international organization predicted that inflation will moderate to 7% this year, in line with the official projections of the Central Bank of Uruguay (BCU).
Regarding monetary policy, he supported the actions of the BCU and suggested that it maintain the “contractive bias” until inflation falls, which will be crucial “to strengthen the monetary policy credibility and support de-dollarization efforts.
Although the general evaluation was good, with outstanding features such as stability and the creation of the Tax Advisory Committeethe IMF raised the alert on the level of debt that the country has
“The debt to GDP ratio is at historically high levels,” he said and advised that, once the impacts of the drought dissipate, Uruguay make an effort to “place the debt on a downward path.”
Source: Ambito
