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☆ China takes swipe at Western 'friend-shoring' efforts
▼ + stars: | 2023-04-14 | by ( Leika Kihara | ) www.reuters.com time to read: +2 min

WASHINGTON, April 14 (Reuters) - China's central bank governor on Friday took a swipe at efforts by Western economies to trade more with allies and rely less on the world's largest goods-exporting country, saying such "friend-shoring" attempts could prevent global supply chain tension from easing. Reducing their deep dependence on supply chains with China at their center has become a top priority among Western economies as Beijing's threats to Taiwan heighten geopolitical risks in Asia. "Despite an overall easing of supply chain tensions, they continue to be challenged by protectionist measures such as onshoring, nearshoring, and friend-shoring," Yi said. U.S. Treasury Secretary Janet Yellen has recently encouraged "friend-shoring," or the diversification of supply chains away from China to market-oriented democracies such as India. The fragmentation of global trade has drawn warnings from international institutions including the IMF.

On Wednesday, Group of Seven (G7) finance leaders pledged to give low- and middle-income countries a bigger role in diversifying supply chains to make them more resilient and sustainable. It's one of the key reasons that the IMF predicts the global economy will stay mired in low-growth mode for years. Georgieva said policymakers might have to accept that development of new, more separated supply chains would involve some cost. "Security of supplies and the reliable functioning of global supply chains is taking a new, higher priority seat in economic discussions," she said, citing the impact of both the COVID pandemic and the war in Ukraine. But he drew a distinction between "de-risking" supply chains and "de-coupling" from China.

☆ IMF urges Asia to keep monetary policy tighter for longer
▼ + stars: | 2023-04-13 | by ( Leika Kihara | ) www.reuters.com time to read: +2 min

REUTERS/Siphiwe SibekoSummarySummary Companies IMF revises up this year's Asia-Pacific growth f'castChina's reopening to underpin Asia's recoveryImpact of global banking stress on Asia limited - IMFWASHINGTON, April 13 (Reuters) - Asian central banks may need to keep monetary policy "tighter for longer" to combat still substantial inflation risks, senior International Monetary Fund official Krishna Srinivasan said on Thursday. The latest forecast implies the region will contribute over 70% of global growth this year, Srinivasan said. The IMF expects China's economy to expand by 5.2% in 2023, higher than the previous year's 3.0% growth. "China's reopened economy is rebounding strongly, and this will generate positive spillovers to its trading partners, providing fresh momentum for Asia's growth," he said. "Unless strains increase and raise broad-based stability concerns, central banks should separate monetary policy objectives from financial stability goals," he said.

☆ IMF's says global economy needs to overcome weak growth, sticky inflation
▼ + stars: | 2023-04-13 | by ( ) www.reuters.com time to read: 1 min

WASHINGTON, April 13 (Reuters) - International Monetary Fund Managing Director Kristalina Georgieva said on Thursday that the global economy has proven remarkably resilient to multiple shocks, but has yet to overcome a combination of weak growth and sticky inflation. The IMF's global growth projections of 2.8% global growth "is not enough to bring opportunities to businesses and people around the world, and most worrisome is the projection for weak growth over a longer period of time," Georgieva told a news conference at the IMF and World Bank Spring Meetings. Reporting by David Lawder and Andrea ShalalOur Standards: The Thomson Reuters Trust Principles.

REUTERS/Ken CedenoWASHINGTON, April 12 (Reuters) - Zambia could lose gains achieved so far from macroeconomic reforms if its ongoing debt restructuring is further delayed, Treasury Secretary Felix Nkulukusa said on Wednesday. The next IMF payout to Zambia from the loan is contingent upon its bilateral creditors reaching an agreement on the long-delayed debt restructuring. The country recently completed the first review of the programme, and the next one is expected in about three months. Ceyla Pazarbasioglu, director of the IMF's Strategy Policy and Review Department, was more optimistic about Zambia's debt restructuring during the panel. The IMF official said that creditors have asked to share and exchange information "sooner" during debt restructuring talks, and added that the Washington-based lender is willing to do so.

☆ Fed will persist as long as core inflation is high, says IMF's Kristalina Georgieva
▼ + stars: | 2023-04-13 | by ( ) www.cnbc.com time to read: 1 min

Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailFed will persist as long as core inflation is high, says IMF's Kristalina GeorgievaKristalina Georgieva, managing director at the IMF, joins 'Squawk on the Street' to discuss global economic outlooks, the synchronized action taken by central banks to tackle inflation, and the importance of price stability.

KARACHI, Pakistan, April 13 (Reuters) - Pakistan's debt continues to be sustainable, International Monetary Fund (IMF) managing director Kristalina Georgieva said on Thursday, after the government reiterated it had completed all requirements to receive a critical bailout from the IMF. Pakistan's finance ministry on Thursday said IMF deputy managing director Antoinette Moniso Sayeh was confident of signing the staff level agreement very soon. Pakistan's government reiterated on Thursday it has completed all requirements to receive the critical bailout money from the fund following a meeting with Sayeh. "The finance minister also shared that all the international obligations have been addressed in time," the finance ministry said in a news release. On Wednesday, Pakistan's finance ministry release a statement following talks with the IMF's Middle East and Central Asia Director Jihad Azour.

REUTERS/Elizabeth FrantzApril 13 (Reuters) - The International Monetary Fund is working closely with Suriname authorities to bring their financing program back, while looking for progress in government talks with China, a key creditor, an IMF official said on Thursday. The IMF and Suriname engaged in a financing program for nearly $700 million in late 2021, but it stalled after the first review was approved more than a year ago. "The authorities are here right now, we're having discussions with them," Chalk said, adding that he looks forward for a mission visit soon to "deepen those discussions." "Having some more progress on the debt restructuring talks with China would really help us with the program, and help the country," he said. Reporting by Rodrigo Campos and Jorgelina do Rosario; editing by Jonathan OatisOur Standards: The Thomson Reuters Trust Principles.

☆ IMF's fiscal chief says U.S. CPI data shows need to maintain inflation fight
▼ + stars: | 2023-04-12 | by ( ) www.reuters.com time to read: 1 min

WASHINGTON, April 12 (Reuters) - The U.S. Consumer Price Index data for March shows persistent above-target inflation pressures, "validating" the International Monetary Fund's emphasis on continuing to fight inflation at IMF and World Bank Spring Meetings this week, IMF Fiscal Affairs Director Vitor Gaspar said. Gaspar told a news conference that fiscal tightening could help remove upward pressures on interest rates by helping reduce fiscal demand and added that he saw little chance of a broad sovereign debt crisis in coming years. Reporting by David LawderOur Standards: The Thomson Reuters Trust Principles.

Reuters GraphicsNOTHING 'BROKEN' YETInternational economic officials gathering in Washington this week for the IMF and World Bank spring meetings can take some comfort that pandemic-era risks are continuing to diminish. An aggressive year of central bank rate hikes hasn't yet "broken" any of the economies involved, with the U.S. unemployment rate at 3.5%, near its lowest level since the late 1960s. Still, that terminal rate remains unclear, and the end of synchronized tightening by the Fed, BoE and European Central Bank doesn't mean tight monetary policy is going away. Wages, services and food are driving price growth to the point that the ECB's attention has shifted almost entirely to underlying inflation on fears that rapid price growth is at risk of getting stuck above target. The U.S. central bank is expected to increase its benchmark overnight interest rate by another quarter of a percentage point next month, and signal whether more hikes may be warranted.

☆ U.S. hard landing remains a possibility, IMF says
▼ + stars: | 2023-04-12 | by ( ) www.cnbc.com time to read: 1 min

Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailU.S. hard landing remains a possibility, IMF saysGita Gopinath, the IMF's first deputy managing director, warns that a U.S. downturn is still "within the realm of possibilities." She adds that Europe is facing a "significant slowdown" this year, despite withstanding the multiple crises of 2022.

☆ Energy price support measures in Europe often no longer necessary, IMF's Vitor Gaspar says
▼ + stars: | 2023-04-12 | by ( ) www.cnbc.com time to read: 1 min

Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailEnergy price support measures in Europe often no longer necessary, IMF's Vitor Gaspar saysVitor Gaspar, director of the fiscal affairs department for the IMF, discusses the global economic outlook and reasons for current pressures, as well as adjustments governments can make as their economies recover.

☆ CNBC Daily Open: Signs of a coming storm
▼ + stars: | 2023-04-12 | by ( Yeo Boon Ping | ) www.cnbc.com time to read: +2 min

This report is from today's CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. "It kind of feels like the calm before the storm," said Ryan Detrick, chief market strategist at the Carson Group. While it's nice to have a calm day or two, investors shouldn't ignore the warning of an impending storm. Subscribe here to get this report sent directly to your inbox each morning before markets open.

☆ Podcast: British doctors strike and the IMF's gloomy outlook
▼ + stars: | 2023-04-12 | by ( ) www.reuters.com time to read: 1 min

Follow on Apple, Google or Spotify. We visit a picket line in Britain where doctors are staging a four-day walkout. Rising interest rates and persistent inflation are adding to the struggle of debt-laden countries. Plus, Elon Musk opens up about Twitter and how California is using water tests to help fight the drug war. Our Standards: The Thomson Reuters Trust Principles.

☆ CNBC Daily Open: Signs of a storm coming
▼ + stars: | 2023-04-12 | by ( Yeo Boon Ping | ) www.cnbc.com time to read: +2 min

☆ IMF says public debt is growing faster than pre-COVID projections
▼ + stars: | 2023-04-12 | by ( Andrea Shalal | ) www.reuters.com time to read: +3 min

Summary Public debt to return to nearly 100% in 2028Growth in debt dominated by U.S., China39 low-income countries in or near debt distressWASHINGTON, April 12 (Reuters) - Public debt is higher and growing faster than projected before the COVID-19 pandemic, driven mainly by the United States and China, the world's two largest economies, the International Monetary Fund's top fiscal expert said on Wednesday. Vitor Gaspar, director of the IMF's Fiscal Affairs Department, said global public debt soared to almost 100% of GDP in 2020 before posting its steepest drop in 70 years by 2022, although it remained about 8 percentage points above the pre-pandemic level. The IMF's report warned that risks were high, and reducing debt vulnerabilities should be an "overriding priority," especially in low-income developing countries where 39 countries were already in or near debt distress. To guard against further and worsening problems, regulators should consider strengthening crisis management frameworks and their regimes for dealing with troubled institutions. "Among the worst possible crises, are crises where you have a financial crisis simultaneously with a sovereign debt crisis, and that is something labeled as the doom loop," Gaspar said.

The latter could slam global growth back to about 1% this year, effectively a recession on a per-capita GDP basis. 'PERILOUS' RISKSThe IMF's Global Financial Stability Report warned of a "perilous combination of vulnerabilities" in financial markets, saying that some participants had failed to adequately prepare for the impact of interest rate increases. Despite the warnings, the IMF's chief economist, Pierre-Olivier Gourinchas, said inflation is still the bigger problem and that price stability should take precedence over financial stability risks for central banks' monetary policy. Only in the event of a very severe financial crisis should those priorities be reversed, he said in a news conference. She added that the global financial system was also resilient due to reforms enacted after the 2008 financial crisis.

In its latest Global Financial Stability Report, the IMF said global financial stability risks had increased "rapidly" in the six months since its previous assessment when it was already touting hazards as being "significantly skewed" to the downside. The IMF said the bank failures "have been a powerful reminder" of the challenges wrought by tighter monetary policy - and the more stringent financial conditions it generated - and the buildup in vulnerabilities since the global financial crisis more than a decade ago. Problems at U.S. regional banks grew last year, as rapidly rising interest rates slashed the value of some banks' holdings in long-term assets such as home loans and government bonds. Going forward, regional banks could face greater scrutiny with respect to their holdings and funding structures, the IMF cautioned. Even still, authorities should be more prepared to deal with financial instability, the IMF recommended, including by strengthening their bank resolution regimes.

☆ UK economy set for smaller hit in 2023 than previously feared - IMF
▼ + stars: | 2023-04-11 | by ( ) www.reuters.com time to read: +2 min

British gross domestic product will contract by 0.3% in 2023, the IMF said in its latest set of global forecasts, a smaller shrinkage than the 0.6% contraction the Fund predicted in January. Britain is no longer the only Group of Seven economy set for a fall in GDP this year as Germany is now expected to shrink by 0.1%, the IMF forecasts showed. But its contraction this year is set to be the biggest among the Group of 20 economies, according to the IMF's forecasts. After narrowly avoiding recession in 2022, Britain's economy has shown some signs of resilience in early 2023. The IMF said it expected Britain's economy would grow by 1.0% in 2024, weaker than most other G7 economies with the exception of Italy while matching Japan's expected growth rate.

☆ IMF warns deeper financial turmoil would slam global growth
▼ + stars: | 2023-04-11 | by ( David Lawder | ) www.reuters.com time to read: +5 min

The IMF's U.S. outlook improved slightly, with growth in 2023 forecast at 1.6% versus 1.4% forecast in January as labor markets remain strong. "Our advice is for monetary policy to remain focused on bringing down inflation," IMF chief economist Pierre-Olivier Gourinchas told reporters. The report included two analyses showing financial turmoil causing moderate and severe impacts on global growth. This "moderate tightening" of financial conditions could slice 0.3 percentage point off of global growth for 2023, cutting it to 2.5%. This scenario could slash 2023 growth by as much as 1.8 percentage points, reducing it to 1.0% - a level that implies near-zero GDP growth per capita.

☆ IMF chief economist: stability risks should not deter central bank inflation fight
▼ + stars: | 2023-04-11 | by ( ) www.reuters.com time to read: +4 min

WASHINGTON, April 11 (Reuters) - Central banks should not halt their fight against inflation because of financial stability risks, which look "very much contained," International Monetary Fund chief economist Pierre-Olivier Gourinchas told Reuters. Gourinchas said most large central banks, including the Federal Reserve, the European Central Bank and the Bank of England, are already near the peak of their rate hike cycles. SEPARATE TRACKSInstead, authorities should contain stability risks with tools used after the failures of Silicon Valley Bank and Signature Bank, such as central bank lending facilities and other backstops, which would free up monetary policy to stay focused on bringing inflation down. "And in my sense, if they're expecting that because they think the Fed or central banks should take into consideration financial stability arguments...we're not there," Gourinchas said. This could lead to an adjustment of yields on longer-term securities upwards as market expectations become more "realigned with what the central banks are communicating."

By 2027, the IMF expects Russia's economic output to be 7% lower than forecasts made before Moscow sent tens of thousands of troops into Ukraine on Feb. 24, 2022, had suggested. "An exodus of multinationals, loss in human capital, isolation from global financial markets, and impaired access to advanced technology goods and know-how will hamper the Russian economy," an IMF spokesperson said. "A sharp worsening in the terms of trade could lead to a significant decline in both the current account surplus and in fiscal revenues," the IMF spokesperson said. Russia says its 2023 deficit will not exceed 2% of gross domestic product (GDP), but many analysts think it will surpass that level. The current account surplus shrank by a little over 73% in the first quarter on an annual basis to $18.6 billion, the central bank said on Tuesday, hurt by the sharply lower energy revenues.

WASHINGTON, April 10 (Reuters) - World Bank Group President David Malpass said on Monday that the lender has revised its 2023 global growth outlook slightly upward to 2% from a January forecast of 1.7% but the slowdown from stronger 2022 growth will increase debt distress for developing countries. Advanced economies, including the U.S. and in Europe, are also doing a bit better than the World Bank anticipated in January, Malpass said as the World Bank's and International Monetary Fund's Spring Meetings week kicked off. But the departing World Bank chief warned that turmoil in the banking sector and higher oil prices could again put downward pressure on growth prospects in the second half of 2023. A bank asset maturity mismatch will take some time to work through and banks are likely to pull back credit for businesses, slowing growth, he said. The World Bank's forecasts tend to be a bit lower because they are based on market exchange rates, while the IMF's forecasts are based on purchasing power parity exchange rates.

☆ Analysis: Debt crunch looms for weaker economies with a wall of bond maturities ahead
▼ + stars: | 2023-04-10 | by ( Jorgelina Do Rosario | ) www.reuters.com time to read: +5 min

"A more prolonged period without market access would be of more concern for the lower-rated tiers of the emerging markets sovereign universe," said James Wilson, EM sovereign strategist for ING. Tapping international debt markets hasn't been a problem across the board for emerging economies. The JPMorgan's emerging markets bond index (EMBI) for high yield debt is at 900 basis points over U.S. Treasuries, and has largely remained over 800 bps since the beginning of last year. The Russia conflict and then the Fed hiking cycle led to higher spreads for a much longer period," said Gregory Smith, emerging markets fund manager at London-based M&G Investment. A weaker U.S. dollar should help countries to tap international markets in the medium term, but recent data fueled jitters that restrictive central bank policies could push the global economy into recession.

☆ IMF's Georgieva sees global growth below 3% in 2023, says robust recovery remains 'elusive'
▼ + stars: | 2023-04-06 | by ( Andrea Shalal | ) www.reuters.com time to read: +3 min

That is the global lender's lowest medium-term growth forecast since 1990, and well below the average growth of 3.8% seen in the past two decades. Georgieva said strong and coordinated monetary and fiscal policy actions to respond to the COVID-19 pandemic and Russia's invasion of Ukraine had prevented a much worse outcome in recent years, but growth prospects remained weak in both the near- and medium-term given persistently high inflation. "With rising geopolitical tensions and still-high inflation, a robust recovery remains elusive. She said India and China would account for half of global growth in 2023, but about 90% of advanced economies would see a decline in their growth rate this year. Recent bank failures in Switzerland and the United States had exposed risk management failures at specific banks and supervisory lapses.

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