tv International Monetary Fund Discusses World Economic Outlook CSPAN October 16, 2021 5:43pm-6:26pm EDT
to reform the process of raising its debt ceiling. raising the debt ceiling. >> thank you for joining the press conference for the i.m.f. world economic outlook. i'm jennifer beckman of the invitation department and i'm joined today by the imf economist. the deputy director of the research department the republics and head of the worl economic studies division.
we're going to begin with brief remarks and then we will go to your questions. gita: thank you all for joining this work league on the world economic outlook. the global recovery continues but it's followed by the pandemic. fueled by the highly cranston submersible delta. we call it the global covid-19 death toll has driven close to 9 million and help concerns rebound holding back a full return to normalcy. pandemic outbreaks including global supply chains have resulted in longer than expected supply disruptions feeding and in a quality in many countries. overall, economic prospects have increased and policy trade-offs have become more complex. compared to our july focus the growth projection for this year has been revised down marginally and is unchanged for 2022 at 4.9%. however, this modest headline revision must go downwards fo
some countries. the outlook for low income developed countries has taken a turn for the worse, therefore worsening pandemic dynamics. the downgrade also reflects more difficult near-term prospects for the advanced economy group in part due to supply disruptions. now partially upsetting these changes projections for some commodities have been upgraded on the back of rising commodity prices. pandemic relief in sectors have caused the labor market recovery to significantly lag th outlook recovery in most countries. the danger of divergence of economic prospects across countries remains a major concern. aggregate output for the advanced economy group is expected to regain its pre-pandemic part next year and exceed it by 0.% in 2024.
by contrast aggregate output for the emerging markets and developing economies excluding china is expected to remain 5.5 percent below pre-pandemic i -- forecasts in 2024. resulting in a larger setback to improvements in their living standards. these divergences are a consequence of the great vaccine divide and large disparities. while over 60% of the population in advanced economies are fully vaccinated and some are now receiving booster shots, about 96% of the population in low income countries remain unvaccinated. furthermore, many emerging markets in upcoming economies face greater risk of inflation expectations while redrawing policy support more quickly despite larger fall in output.
-- disruptions pose another policy challenge. on the one hand pandemic outbreaks and climate disruption have resulted in shortages of key inputs and lower manufacturing activity in several countries. on the other hand, these suppl shortages alongside the pent-up demand and rebound in commodity prices have caused consumer price inflation increased rapidly in many countries. food prices have increased the most in low income countries. where food insecurity is more acute, adding to the burdens of poor households and the risk of social unrest. another challenge is risk taking and faraj immarkets. a plausible factor behind these complex collages is the pandemic grim on the society.
the goal is to vaccinate 70% by the middle of next year. this would apply to high-mechanic -- income countries, coordinate with manufacturers to prioritized callbacks near term and move trade restrictions and vaccines and their input. at the same time, 20 billion-dollar revenue in grant-funding gap for testing will save lives now and keep vaccines. looking ahead, vaccine manufacturers and high income countries original production of covid vaccines in developing countries through financing and technology. another priority is the need to slow the rise in global
temperatures and contain the adverse effects of climate change. this would require ambitious commitments to reduce greenhouse gas emissions and upcoming united nations climate change conference. a poems strategy that includes an international carbon price -- adjusted to countries' circumstances, agree to public investment push and compensate targeted funds to help advance the green energy transition in an equitable way. in addition, multilateral efforts to ensure international liquidity for constrained economy and faste inch limitation of the common framework to restart sustained debt would help limit -- on countries.
the imf are calling on countries with strong positions to voluntarily handle the reduction. furthermore, it is exploring the establishment of resilient sustainability trust, which will provide long-term funding in both countries and sustainable growth. at a national level, it should be calibrated for local economic conditions aiming for more sustainable employment while protecting credibility of the framework. with space being more limited in many countries, after spending should continue to be prioritized while transfers need to be accounted. reinforced bill training and support reallocation. health outcomes improve quality emphasis in increasingly long-term structural goal.
with public debt levels at record highs, it should be rooted in incredible frameworks backed by revenue and spending measures. such credibility can lower financing costs of countries. moving on to monitor policy. it will need to walk a fine line between inflation and financial risk while supporting economic recovery. now, we project high uncertainty headline inflation would likely return to pre-pandemic levels by middle of next year with a group of advanced economies and emerging and developing countries. there is across countries with upside risk in some countries and the rest in some emergin markets in developing economies. and central banks should be
prepared to act if the risk of rising inflation being more material in this uncharted recovery. announce clear triggers and act in line with better communication. generally, clarity inconsistent actions to avoid unnecessary policy activist rising in the market setback the overall recovery ranging from the u.s debt ceiling lift, to debt restructuring and china's sectors escalating trade and technology. recent developments have made it abundantly clear we are in this together and the pandemic is not open over anywhere until it's over everywhere. if covid-19 were to have a prolonged impact into the medium term, it could reduce global g.d.p. by a cumulative $5.3
trillion over the next five years relative to current projections. it does not have to be this way. global community must step up efforts to ensure vaccine access from every country, overcome vaccine hesitancy where there is adequate supply and increase better economic perspectives for all. thank you. >> thank you. for reporters watching, there are three ways to submit questions. you can use raise your hand feature or type a note in the chat or you can submit written questions in the i.m.s. center. to start this morning, we'd like to go to webex and take a question. >> thank you very much for doing this. i have a question on the chinese economy. the report for the chinese
economy shows a slight decrease. and i was wondering if you could talk about the reasons it if you could share some thoughts on china joining, or that have any impact on the recovery of china and also the region? thank you. gita: we have a small downgrade for china. we reflect the fact that fiscal tightening was somewhat more than we previously anticipated in one of the main reasons for the downgrade. there are other challenges at this time in terms of this sector in terms of supply chain disruptions in other parts of the world. as for your question of joining the comprehensive partnership, we are aware that they have put in a formal application.
the partnership is high-quality traded -- pretty high standards of trade practices allowed. i believe it would be good for the world to have more countries join such an agreement. >> thank you, gita. for the next question, we'll also take it from the press. eric martin from bloomberg. [inaudible] and
how does your department intend to make recommendations? >> thanks, if audio wasn't great. did you -- gita: yes, i believe i understood you approximately. it was-- everybody knows this. it's about the doing business report. it has nothing to do with imf data. in our case, incredibly seriously which is why we have processes in place to make sure data and focus are in line, reviewed carefully by multiple departments and economies.
with any institution, we are constantly working to ensure higher standards for our data and for our research and work. >> thank you. for the next question, david from reuters. >> thank you. just to follow-up on that question in terms of steps, what the treasury asked to do and what the board said it would need to consider, what specifically do you think is required here to ensure this integrity? also related to inflation questions, central bank needs to
be prepared to act quickly if inflation expectations look like they are becoming unhinged, what will you be looking at to measure that? if you determine whether or not inflation is really much more durable than what we think it is now. thanks. >> on your first question, the board made clear that the constants in their impartiality and analytical work of the imf. that was also a very pointed statement. in terms of what additional steps are needed, this is something that we will be hearing more from in the coming days, we have very robust
systems already at the imf in terms of making sure the credibility, the integrity of our data. we have independent evaluation offers for these reports that we put out on a regular basis. again, we are always looking for ways to improve. i look forward to seeing what additional steps are mentioned. now to your question about inflation expectations. in our view, we should expect inflation to come back to normal levels by the middle of the year. for the group as a whole, it does very. it does change value across countries. there are risks. we are paying attention to what's happening with medium and
long-term inflation expectations. we are also paying attention to what's happening with wage inflation. it's elevated in the u.s., as we all know. it's concentrated in some sectors. i would be interested in seeing what's happening with shelter inflation. all of these would be flags to plague -- pay close attention to. >> thank you. we are going to take one more question from the webex and then we will turn to some of the questions that have been submitted online. raphael has a question. >> yes. thanks. i have a follow-up on the question regarding inflation. latin america has one of the
highest price projections in the world. i was hoping you could talk about the risks for that forecast. in particular, in the case of argentina, if you see any risks. >> thank you. it's important to highlight the fact that while we are talking about inflation rising, it's across regions. latin america is one region where we have seen inflation go up more widely across countries. again, latin america and other parts of the world are being affected by global shocks with increases in energy prices, commodity prices, supply chain disruptions. there is variation across countries in terms of the domestic demand and inflation pressures that are happening.
again, consistent with what i said previously. it's important for countries to tailor their monetary policy actions to country specific circumstances. to the question of argentina, we see argentina's inflation expectations as unanchored. it continues to be unanchored at this point. also because of the increased reliance on monetary financing in argentina. that's the current picture right now. we continue to work closely on technical levels with the argentine government, towards coming up with solutions and more sustainable growth. >> thank you. i'm turning now to today news africa. he asks, can you talk broadly about how afros economic recovery will be affected by the
pandemic and the lack of vaccines. >> africa has gone through a very tough time with this crisis. what's unfortunately unique about africa is in terms of the levels of vaccination. we are looking at less than 4% of the population in africa having been vaccinated while we are looking at advanced economies where it's over 60%. if you look across different parts of the world, i think the region where there has been the biggest amount of limited access to vaccinations is the african continent. that's one of the big concerns that we have. we know that the pandemic is not over. this is why we are pressing hard to get to the 40% target of all countries by the end of the year. this will require that countries
deliver on their vaccination pledges to kovacs and also that manufacturers prioritize delivery. that will help get vaccines to the african continent. i think that's a very important health issue need -- that needs to be abreast -- address for the region as a whole. the african continent still has to deal with issues of high level of debt. many countries are in high levels of debt already. the international community has to play an important role in restructuring the debt. also in providing additional financing. we estimate that we need around $250 billion in additional financing to make sure that the african continent is able to achieve its developing goals over the next five years. that requires immediate attention from the international community. >> thank you.
another question submitted online. he asks, why are they not forecasting the bridge alien -- brazilian gdp will be 2.1% in 2026. >> in the case of brazil, we have a slight downgrade because of the effects that we expect from the rising increase in monetary policy rates, given the high inflation in brazil. also because of the slowing revision for the u.s.. u.s. is one of the main trading partners. that has led to a downgrade. would you like to add something more on brazil? >> we did have an upgrade to our forecast in july. what's important to keep in mind
is to keep that in mind while looking at our numbers. in the near term, it has had a very modest downgrade. higher commodity prices and the return of services activity being important for the recovery. >> thank you. i will take two questions on asia that have been submitted on the press center before we return to webex. the first comes from india. what is the key upside and downside risk to india's growth forecast for 2022 and 2023? is the government's deficit a major concern? can it afford to spend more? >> we don't have a change to our
growth forecast this year or next. india came out of a very tough second wave. there has been no change as of now. there are many challenges in the economy in regard to the financial market. with regard to the fact that the virus has not gone yet. india is doing well in terms of vaccination rates and that will be held. would you like to add something on adia? >> sure thanks. in terms of the second part of the question on fiscal deficit, we think that there is still room to provide more support if needed if the pandemic takes a turn for a worse, to provided in a targeted manner to the worst affected households and firms. going forward over the medium-term, it will be important to put in place credible medium-term strategy to bring down the debt to gdp ratio
and meet the needs of the indian economy. >> thank you. another question on asia. this is from the manila times. according to the imf, the philippine economy will go -- grow by 3.2% this year and 6.3% in 2022. what is the imf's region for -- reason for the new outlook? >> it's another country in asia that was hit hard by the second wave. at the same time, they've had additional budget that will help in terms of the recovery. would you like to add anything more? >> sure. as you mentioned, the philippines is coming out of a very steep contraction last year. the recovery is underway. we expect the economy to grow three point prove -- 3.2% this year. we have downgraded projections
because of the pandemic taking a turn for the worse and caseloads going up. we expect a shallower recovery in the second half of the year because of renewed concerns about caseloads and the spread of the pandemic. going forward into 2022, we think with the continued vaccine rollout and policy support, it should support a continued recovery in the philippines economy. we project growth at about 6% in 2022, supported by trading partner growth. >> thank you. returning to the webex. we have a question. you come in? can you open your mike?
you are muted. >> can you hear me now? >> yes. >> so i had a question on inflation. to what extent are you worried about increasing inflation in major economies by the u.s., partly due to longer than expected supply disruption? in august, you warned that markets cannot afford a repeat of the 2013 ticker tantrum. what is your observation now? how are the markets prepared, at the risk of sudden change in monetary policy as a result of the rising inflation? thank you. >> inflation is indeed one of the risks that we flagged in this report. we have seen inflation go up essentially in many countries. again, i want to highlight that this is not a uniform worldwide phenomenon.
these originated and how much inflation has gone up in different parts of the world. as for the question of specific concerns on inflation in an events economy, the risks are there. we are seeing a very unusual recovery which is what happens with a pandemic driven crisis and recovery from that. what we are seeing is supply demand mismatches that have lasted a long time because the pandemic has also lasted a long time. while we see bounced demands, supply hasn't been able to rebound as fast. that combination has led to high levels of inflation. we see that in commodity prices, in supply chain breakdowns. again, the expectation is that some of this will persist into next year. over time, we expect that these will iron out and we should
expect to see inflation coming back to much more normal ranges. i'm going to emphasize that there is tremendous uncertainty. we've never seen a recovery of this kind where you will have shortages in the labor market at the same time that you have high levels of unemployment. the fact that you have ports unable to offload container ships. this is very unique. we have to be vigilant to make sure that these particular supply-side shorts don't end up d anchoring inflation expectations and creating wage price. it will require a strong monetary policy response. >> great. thank you. the next question we would like to turn to is from deb asked who is joining us in webex. >> thank you very much. i wanted to ask about the special allocation, just if you could tell us how you are seeing those being used.
the imf put a lot of effort into getting the allocation to happen. are you seeing these being used by the countries? what's the timeline on the re-channeling of this? can you update us on what's happening with that? thank you. >> $650 billion allocation is the story. it comes at a time when countries need the additional liquidity that they can get, the additional reserves that it provides. we are living in very uncertain times. so having that buffer in terms of liquidity will be very helpful for countries. as you know, strs are given to countries to use as they wish. countries are using it for multiple purposes, addressing health concerns.
you have to remember that what they do is provide you with additional reserve buffers to prevent, for a rainy day. countries are using it in multiple different forms to help them deal with the crisis. it also improves their market standing because of these additional reserves that they have which helps them access financial markets. more favorable terms. it's early days to see exactly how countries will deploy this particular tool. but this is something that we will watch very closely. >> so for the next question, we are going to return to the online press center. the first one is from deutsche welle who asks, several recent analyst commentaries have flagged stagnation concerns amid u.s. and parts of europe including germany and the u.k..
they cite faltering economic growth and a steep rise in energy prices. how valid are the stagflation concerns? >> let's just look at what our estimates are. projections for this year is for global growth to be 5.9% and come down to 4.9% next year. specifically, euro area. we have growth at 5% this year and 4.3% next year. so this is nowhere near stagnation in any form in terms of our growth forecast. there are risks. i think the risks are, as we are seeing more supply shocks as opposed to demand-side shocks. because of the breakdowns in the supply chains because of the rising commodity prices, also the pandemic. weather-related offense. both of those contribute to firms facing shortages.
they are producing less and we have seen that already show up in germany. one of the reasons for the downgrades is because of that. the supply disruptions. on the other hand, higher prices. we think that this complicates policymaking. you have monetary policy with the tools for it. it's more complicated because you have more supply which is reducing activity and raising inflation. in terms of the overall baseline picture, this is not something that looks remotely close like stagflation. >> for the next question, we will turn to barry would of rt hk hong kong who asks, how might the global work from home movement resulting from the pandemic affect output productivity and employment? >> let me first mention that
when it comes to employment, what we are seeing is weaker recoveries and employment as compared to output. even if you look at our projections into next year, we are seeing many countries returned to pre-pandemic levels by next year in terms of output. this has been, while it is typically the case that employment lags upwards recoveries, this time around it is more severe because of the health considerations. people want to worked -- we are seeing young workers having a harder time returning back to employment. the work from home provides flexibility for certain kinds of workers. you can do remote work. i think it would be beneficial in terms of productivity for those who don't have to commute to work. you save time and that has a
positive effect. it affords women the flexibility to be able to return to work. as of now, we are not seeing that translate into women returning as quickly back to the labor force. it's also because of childcare issues, about schools reopening or not. all of this needs to be addressed. i think that the flexibility helps certain comes affirms waste productivity with their workers. there is the additional piece about interactions in the workplace and creative ideas that come around there. everybody will have to figure out what the optimal balance is to make sure that they can remain more productive. >> thank you. another question that has been submitted online. she asks, do you see risks in the mexican recovery, in case
that congress reframe -- approves the reforms to limit participation of private companies in the energy sector. >> mexico's economy is recovering. it's no longer a two speed recovery. it was driven by exports and manufacturing previously. now we are seeing recovery in the services sector. that's a good sign that the recovery is much more broad-based. for your specific question about the energy sector, we have seen a rolling back of the energy sector reforms from a few years ago. that certainly increases policy uncertainty, which then can inhibit private sector investment. our view is that when it comes to energy provisions, you should be able to do this as efficiently, as affordably, and as sustainably when it comes to
the environment to make that available. that has to continue to be the focus when you're building any kinds of reforms in the private sector. >> thank you. we are very quickly running out of time. we do have enough time to turn back to the webex where we have a question. >> [inaudible] >> we hear you. >> thank you for taking my question. [inaudible] >> so, i would say it is highly
unproductive to have the situation with respect to the u.s. debt ceiling. a point that we have been waking for a while now is to have a more long-term solution to it. that could be done by replacing the debt ceiling with some kind of medium-term fiscal target as opposed to the debt ceiling. or raising the debt ceiling whenever to be in line with what is it -- it is in terms of tax and appropriations. again, these constant reoccurrences are certainly not helpful in terms of ensuring uncertainty about the future. this is something that should be reformed. >> thank you. that's all that we have time for this morning for this press conference.
thank you for joining us. we don't really know how much money has gone into them as result of that arcane senate process known as reconciliation which is now a household word. the provision that required reporting was stripped out. based on the stuff i said, we are talking about tens of billions of dollars going into opportunity zones. i think the bulk of the money has gone into zones that didn't
really need the money, they were already improving, or what do projects that were probably going to be built otherwise. >> sunday night on c-span q&a. you can listen on our c-span now at. -- app. >> next week the house and senate will be in session. on tuesday live on c-span, the senate finance committee considers the u.s. border and customs commissioner. then the january 6 committee will refer steve banta the justice department for his refusal to appear before the committee.
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