IMF warns economic recovery threatened by virus and inflation | Economic news
By MARTIN CRUTSINGER, AP Economic Editor
WASHINGTON (AP) – The International Monetary Fund warns of growing threats to the global economic recovery posed by the ongoing coronavirus pandemic and spike in inflation.
The lending agency on Thursday called for redoubled efforts by rich countries to increase coronavirus vaccination rates in poorer countries, while urging the Federal Reserve and other central banks to respond quickly if current inflationary pressures are not proving to be transitory.
The IMF’s policy-setting panel of 190 countries concluded its annual meeting with a joint statement expressing concerns about the wide divergence in immunization rates between rich and poor countries.
The group urged rich countries to redouble their efforts to achieve the goal of immunizing 40% of the population of all countries by the end of this year and 70% by the middle of next year. .
While nearly 60% of the population in advanced economies are now fully immunized, only around 4% of the population in the poorest countries are.
“We will take measures to help increase the supply of vaccines and essential medical products and inputs to developing countries and remove relevant supply and funding constraints,” the finance officials pledged.
âThe emergence of viral variants has increased uncertainty and the risks for the recovery are on the downside,â the group said. âThe crisis worsens poverty and inequalities.
The United States was represented at the financial meetings by Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell.
Finance officials have also noted rising global inflationary pressures and said the Fed and other central banks must “act appropriately” if price spikes prove to be more of a threat to economic recovery.
The Fed signaled last month that it may soon begin the process of unwinding some of the extraordinary support it has put in place in response to last year’s coronavirus recession. This decision would be a first step towards possible interest rate hikes that would slow growth and keep inflation under control.
The IMF this week released an economic forecast update that slightly lowered its global growth forecast to 5.9% from 6% in July. The degradation reflected persistent disruptions in the supply chain and the wide disparity in immunization rates. For the United States, the IMF is forecasting 6% growth this year, down from its July forecast of 7%.
The IMF’s political panel also approved on Monday the conclusions of the agency’s board of directors on âfull confidenceâ in IMF Managing Director Kristalina Georgieva. The support for Georgieva came following an investigation into allegations that, while a senior World Bank official, she and other World Bank officials pressured staff to improve the ranking China and other countries in an influential business climate survey that has since been halted. .
Georgieva told reporters on Wednesday that the review showed there was no “out there” in the charges. But Yellen said in a speech to the IMF’s policy panel on Thursday that the results of the review by an external law firm “could reduce confidence in international financial institutions if there are no strong measures to strengthen responsibility, protect data integrity and prevent mistakes “.
Critics cited the incident to substantiate their claims that China and other countries are seeking to exert undue influence over the IMF, World Bank and other international financial institutions.
Yellen said the IMF and other organizations must find ways to strengthen the rights of whistleblowers.
âThe United States will closely monitor developments and assess any new facts and findings if they become available,â Yellen said.
Anti-poverty groups on Thursday expressed disappointment that the IMF had not been more specific on how the agency plans to increase vaccination rates and provide increased resources to fight climate change.
“Given the worsening pandemic in most countries of the world, I am concerned about the lack of action at meetings on vaccine distribution, debt relief and the general response to the pandemic.” Eric LeCompte, executive director of religious development group Jubilee USA Network, said in a statement.
“It is baffling that we still do not have plans for funding and distributing vaccines to reach all developing countries,” LeCompte said.
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