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The global economy is “short of breath”, the outlook for the world economy will be more volatile

The Russia-Ukraine crisis has a significant impact on the supply chain

The International Monetary Fund (IMF) has forecast global economic growth of 3.6% in both 2022 and 2023, down 0.8 and 0.2 percentage points respectively from its January forecast. In major economies, this year, the IMF forecasts that the GDP of the US will increase by 3.7%, China is 4.4%. GDP in the eurozone fell to -2.8%, Russia is -8.5%, Ukraine is -35%.

The IMF and the World Bank jointly assessed, the meeting Russia-Ukraine conflict become a new threat. Along with the long-term consequences of the COVID-19 pandemic, the prospect world economy There will be more uncertainty.

Ms. Kristalina Georgieva – Executive Director, International Monetary Fund (IMF) assessed: “First, it is necessary to end the conflict in Ukraine. Second, continue to deal with the pandemic with comprehensive tools including vaccines. , testing and anti-virus treatments are deployed everywhere. Third, tackle inflation and debt. Central banks should act more decisively.”

The global economy is out of breath, the world economic outlook will be more unstable - Photo 1.

143 countries around the world have had to adjust their growth forecasts to the downside. The WB noted that huge debts and inflation are two major issues challenging global growth. Developing countries have to deal with spikes in energy, fertilizer and food prices. A $170 billion aid fund is proposed by the World Bank to support poor countries. The organization also called for debt restructuring for developing countries.

Mr. David Malpass – President of the World Bank (WB) analyzed: “The data shows that large debts are accumulated in the poorest countries. It is important that the resolution process begins early. Sri Lanka are facing that problem, there is an urgent need to find a solution to the problem of rising interest rates, increasing debt pressure for developing countries.

Challenges with developing economies

Many developing countries face great pressure. Over the past 10 years, many countries have increased their debt to cope with the consequences of the 2008 financial crisis and most recently the COVID-19 pandemic. Currently, interest rates are trending up. According to the President of the World Bank, the price burdens of fuel, fertilizer, food and possibly interest rates, all of which will have a major impact and cause deep concern for developing countries. develop.

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Just coming out of the COVID-19 crisis, the world has entered another economic crisis. The outbreak of war in Ukraine has hampered the recovery of most economies. Both the World Bank and the International Monetary Fund have issued a warning: The global economy is running out of breath.

Mr. David Malpass said: “The war in Ukraine and the COVID-19 blockade in China are making the road to recovery harder. The war affects commodity and financial markets, trade links. Advanced economies with developed social protection systems are supporting their populations from the damage caused by inflation and trade bottlenecks, but poorer countries have limited financial resources and weak systems. are in dire need of help.”

According to the IMF, the total debt of governments, businesses and households around the world has increased to 256 percent of GDP, levels not seen since the two world wars in the first half of the 20th century. Many developing countries Developments have accumulated mountains of debt over the past decade, especially in the last two years as they need financing to cover the costs of the COVID-19 pandemic.

According to Mr. Vitor Gaspar – Fiscal Affairs Director of the International Monetary Fund: “The financial supervision system is paying attention to the risk of government debt. Nearly 60% of low-income developing countries are experiencing difficulties. into default or at high risk of default.

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For developing countries, the recovery process is overshadowed by more difficulties. Wage costs recorded a new record high in March. Energy prices, and interest rates are both in an uptrend, adding to the pressure on life. “The current situation can be called a food crisis, an energy crisis. It is remarkable how important food is in the budgets of households in poor countries, which can be as much as 60 percent. In some countries, low-income countries are the ones with the most limited fiscal space. This shows the urgency of the food security situation in these countries.”

Mr. Pierre-Olivier Gourinchas – Chief Economist, International Monetary Fund said: “Governments can mitigate the impact of rising prices by taking measures to support vulnerable populations, in There are solutions such as discounting bills for essential services or direct assistance to poor families.”

To help countries cope with rising inflation as well as severe financial stress caused by rising debt, the World Bank will build a $170 billion emergency aid fund over the next 15 months to support developing countries. poorest countries are suffering from many crises. This is the largest financial support commitment ever by the World Bank.

Asia’s Role in Economic Recovery

The annual Boao Forum for Asia took place from April 20 to 22 in Hainan province, China, with the theme “Epidemic and the world: Joining hands to promote global development, building a common future”. . One of the most discussed topics is Asia’s role in the recovery of the regional and world economies. Asia is a leader in many fields of science and technology, plays an important role in the global supply chain of goods, etc., which is expected to be the driving force for the recovery of the global economy in the context of world fluctuations. measure.

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China has just approved a list of 666 enterprises that are multinational corporations, key domestic enterprises to resume production even when Shanghai is still under blockade. It is the leading Chinese company in chip manufacturing SMIC, Shanghai Automobile Industry Corporation (SAIC Motor), multinational corporations Tesla, Volkswagen … This is considered an important solution to help the production process. normal production in China as well as avoid the risk of disruption to the global supply chain. China – the world’s factory has an increasingly important role in the global supply chain. Following the forum, Mr. Marcos Troyjo, President of the New Development Bank (NDB (emphasizing the increasingly important role of globalization. This is not only due to the success of Japan and Korea, but over the past 35 years China, with its increasingly important role as the world’s factory, now, with its development towards the way In the fourth industrial revolution, countries are increasingly racing to increase their power globally.

The Forum also released the “Economic Prospects and Integration Process of Asia” Report, which highlighted Asian economies outperforming regions in attracting foreign direct investment (FDI). . This proves that the regional production chain is not significantly affected by the epidemic and the trade tension between the US and China.

Kristalina Georgieva – Managing Director of the International Monetary Fund: “China has an important role to play in the global recovery, it can be more supportive in terms of macroeconomic policy, including transition Focusing support on vulnerable households to increase consumption, using policies to direct economic activity to areas of lower carbon”.

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