IMF: global recovery is likely to derail – Il Sole 24 Ore

History of the article

Close

This article was published on February 24, 2016 at 20:58.
the last change is the February 24, 2016 at 22:53 hours.

“the global recovery has weakened further in the face of increased financial turbulence and a fall in asset prices. ” This was stated by the International Monetary Fund, which points out that after an “unexpected” slowdown in global economic activity at the end of 2015 there has been a further weakening in early 2016. This is why the IMF believes that a cut its growth estimates’ it is likely “in the new edition of its World Economic Outlook that spread in April. In January, the Fund had reduced its global forecasts of 0.2% for both 2016 and 2017, respectively, an increase of 3.4% and a 3.5 per cent.

fragile global Congiuntura
The warning is contained in a document today entitled “Global Prospects and Policy Challenges” and prepared in advance of the summit of Finance Ministers of the G -20 to be held on 26 and 27 February next in Shanghai, China. The Washington Institute explains that “these developments point to a greater risk of derailing the recovery at a time when the global economy is particularly vulnerable to adverse shocks.” This situation ‘fragile’ increases, says the IMF, “the urgent need for far-reaching policy responses that reinforce growth and manage vulnerabilities.” For this “accommodative monetary policies remain essential where inflation is still below the central bank target.” But at the same time “it should be reduced excess dependence on monetary policies.” The Fund says that strong multilateral actions are necessary to boost growth and mitigate risks. In this regard the institute led by Christine Lagarde argues that the “G-20 must act now to implement with determination the existing growth strategies” and that “may be needed reforms to the global financial safety nets, including new funding mechanisms” .

Germany should do more for European growth
In the euro “continues a gradual recovery, supported in part by lower oil prices despite a slowdown in net exports. However, low investment, high unemployment and weak balance sheets weigh on GROWTH “. The Fund emphasizes “the continuing need for deleveraging in the companies’ and the level” still high “of Europe’s non-performing loans. The IMF points out that the EU banks’ have suffered sharp falls in the stock market, in the wake of a profitability that is weakening, reflecting a legacy of high debt, the exposure to commodities and emerging markets and interest rate matters negative “, this framework that according to the IMF also applies to Japan. The institute headed by Christine Lagarde – who last week and a second term ‘won – reiterates that Area euro countries, including Germany, have to maneuver from a fiscal point of view’ should do more to support growth through investment in infrastructure, for example. ”

Incognita China
Another fundamental issue of global growth is the slowdown in China. “His transition” towards a more sustainable economic model less dependent on exports, “was one of the key factors behind the weakening of manufacturing, trade and global investment – it supports the fund – China’s growth is expected to slow in the face of imbalances in real estate, credit and investment and a rebalancing of the economy towards consumption and services. ” The IMF says that “a worse slowdown in China estimates – with strong effects on trade, commodity prices, confidence, volatility in financial markets and currencies – could lead to a more generalized slowdown in emerging and advanced economies, especially if contagious further investment, the growth potential and future expectations of income tax. ” Currently the Fund is estimated to Beijing a GDP rising by 6.3% this year and 6% next year after + 6.9% in 2015.

The Fed communicate better its intentions
the IMF also devotes a chapter to US monetary policy, the other key factor that moves the world markets. After the monetary tightening last December, the first since June 2006, the United States’ further action should be well communicated and based on clear evidence of pressure on wages or prices and an assessment that inflation is getting ready to grow towards the target Federal Reserve of 2%, “warns the Fund.

© ALL rIGHTS RESERVED

Permalink