Brussels — The International Monetary Fund may be trying to lower its eurozone growth forecast amid growing concerns about Omicroncovid varieties and sustained high inflation.
The fund said in October that it expects the eurozone economy to grow 4.3% in 2022. Currently, the agency warns of “possible modest revisions” when presenting new quotes next month.
“Eurozone cards can be downgraded very modestly,” IMF managing director Cristalina Georgieva told CNBC on Monday.
Increasing supply pressure, High energy price Also, the reintroduction of new social restrictions in some eurozone countries is one of the fund’s primary concerns.Will be provided as newly identified omicronCovid variant reported In more and more countries around the world.
According to the IMF, pandemics remain the greatest risk to economic growth.
“We are screaming from the top of the mountain. [the] Pandemics are the greatest risk to the world economy. And we have been very insisting on vaccination the world. There is progress, but not enough. “
In light of the proliferation of Covid cases and new variants, many eurozone countries impose social restrictions on unvaccinated individuals. For example, Germany and Austria have announced that they will impose a blockade on those who have not yet been vaccinated, and Greece will impose fines on those over the age of 60 who have not been vaccinated.
These measures are, as the government claims, an attempt to protect the national health system. In fact, these steps also prevent a complete shutdown and the associated financial consequences.
When asked if targeting unvaccinated people was the best approach to prevent financial damage, Georgieva said: [a] Correlation between [the] The level of vaccination and the speed of recovery. Therefore, in this sense, it supports vaccination priorities. The only message we have is to vaccinate everyone, everywhere. “
“Simply the conditions aren’t there,” Georgieva said. “In 2022, [euro area] Inflation will drop to less than 2%. So, unless something changes … the Chinese economy shrinks or the real estate market is restored, the ECB has the corresponding tools, but not these wage pressures or other factors. [the] The ECB has the right to adapt. “
Inflation in the euro area is projected to fall until 2022, below the ECB’s 2% target in the medium term, according to IMF forecasts.
Nevertheless, the IMF said wage negotiations are a notable area. “Future wage negotiations, which are expected to be more frequent than ever after many contract renewals were put on hold during a pandemic, require close scrutiny,” the report said Monday.
Wage growth is an important factor in the impact of inflation on households, and as if wages were below inflation, consumer purchasing power could decline, affecting central bank tightening rates.
Market players are worried about the outcome of next week’s ECB meeting to understand how central banks are trying to square the news of Omicron Covid variants and higher inflationary pressures.
This is after the Fed said last week that it could taper at a faster pace than previously expected. In contrast, the central bank of China announced on Monday that it would reduce the reserve requirement ratio (the amount of reserves a bank must hold) in order to increase the liquidity of the economy.
In contrast to the start of the pandemic, Georgieva said, “Today, the situation in the country is very different. Different stages of the pandemic, different levels of vaccination, different recovery rates, different levels of debt, Various inflationary pressures … We are telling our members that we are tailoring your policies to your particular situation. “
The IMF announced on Friday that it would consider an investigation process to ensure the integrity of the data.The announcement will be made about 2 months later Data rigging scandal at World Bank It covered the period when Georgieva was the CEO of the institution.
When asked if the review process at the IMF was an attempt to clean the IMF’s reputation, Georgieva said, “We have a great reputation.”
The IMF has the potential to reduce eurozone forecasts, says Cristalina Georgieva
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