Global economy facing ‘its biggest test’ since WWII
Crisis upon crisis is bringing the global economy to the brink of crisis.
As the first World Economic Forum to be held in person since 2020 opened in Davos, Switzerland on Monday, the International Monetary Fund said the economy is facing “probably the biggest test since World War II”. .
“We are facing a potential confluence of disasters,” IMF Managing Director Kristalina Georgieva said in a statement.
It warned that Russia’s invasion of Ukraine has “compounded” the effects of the COVID-19 pandemic, weighing on the economic recovery and increasing inflation in the form of food and fuel costs.
Rising interest rates are adding to the pressure on countries, companies and households with large piles of debt. Market volatility and ongoing supply chain disruptions also pose risks.
And then there is climate change.
The head of the International Energy Agency urged countries to make the right investment choices in response to fossil fuel shortages resulting from Russia’s attack on Ukraine.
“Some may use Russia’s invasion of Ukraine as an excuse for … a new wave of fossil fuel investment,” IEA chief Fatih Birol said during a discussion in Davos. “It will forever close the door to reaching our climate goals.”
The scale of the economic challenge was underscored on Monday by a new OECD report, which showed the combined GDP of the G7 countries shrank 0.1% in the first quarter of the year compared to the previous three-month period.
To limit economic tensions, the IMF is calling on government officials and business leaders to meet in Davos to discuss easing trade barriers.
But as countries grapple with growing despair about the stay-at-home crisis, some are going in the opposite direction, imposing restrictions on the trade of food and agricultural products that could exacerbate shortages and lead to global warming. But prices can be raised.
Earlier this month, India’s decision to ban wheat exports pushed up the price of the grain, though it is a relatively small exporter. Indonesia banned most exports of palm oil in April to protect domestic supplies, but will lift the ban this week.
Speaking during a visit to Tokyo, President Joe Biden said on Monday that a recession was not inevitable and reiterated that the White House was considering removing some of the Trump-era tariffs on Chinese goods, which Treasury Secretary Janet Yellen said. that do more harm than good. American Consumers and Businesses.
Meanwhile, China could see its economy shrink this quarter due to the impact of Covid-19 lockdowns in Shanghai, Beijing and dozens of other cities and the fallout of a real estate crisis. The country’s central bank on Friday cut a key interest rate, the biggest on record, after declining housing sales.
Professor Zhu Ning from the Shanghai Advanced Institute of Finance said he believed authorities still had enough options to deal with the series of challenges facing the world’s second-largest economy.
“China still has plenty of room if it wants to – to lower the interest rate, to give a monetary stimulus to the economy,” he said.
— Anna Coban, Michelle Toh, Mark Thompson and Ellie Malloy contributed to this article.
The global economy is facing ‘its biggest test’ since WWII first appeared on CNN.
