IMF forecasts a decline in global inflation in the medium term

The International Monetary Fund predicts a progressive decline in global inflation and economic growth in the medium term, beyond differences between countries in fiscal, economic, and investment matters, as well as policies to generate employment and reduce poverty.

According to the international organization, although inflation has decreased after the pandemic, “divergences in growth and inflation persist between countries, along with depleted reserves and discouraging medium-term growth prospects. Vulnerable countries face the risk of falling even further behind.”

It indicates as a priority at the global level “to replenish reserves, reactivate medium-term growth and adapt the policies and tools of the International Monetary Fund (IMF) to a constantly changing world.”

Differences in inflation demand specific policies for each country, which take into account “factors such as the structure of labor markets, price rigidity, and dependence on energy and food imports.”

Slow growth in the medium term makes it more difficult to reduce poverty and create jobs in developing economies.

IMF proposes facilitating investment in key sectors

On the other hand, “fiscal deficits and high public debts could exceed 100 % of gross domestic product (GDP) in 2029 if decisive measures are not taken,” says the multilateral organization.

Among the measures it proposes to successfully achieve the goals is rebuilding fiscal space to strengthen economic resilience; “facilitating investments in climate and technological transitions; increasing revenues through more progressive taxes or higher carbon tax rates, and spending cuts in less priority areas” to pay off debt and free up space for strategic investments.”

Reforms to boost medium-term growth can be aimed at “simplifying red tape, improving education and training of the workforce, and promoting competition in markets. In addition, investment in infrastructure, especially in renewable energy and sustainable transport, can create jobs and stimulate long-term economic growth.”

The IMF does not leave out the fundamental aspect of international cooperation as a way to face global challenges such as “climate change, inequality and geo-economic fragmentation”.

M.Pino

Source: americaeconomia

(Reference image source: Behnam Norouzi for Unsplash+)

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