IMF predicts prolonged global inflation if vaccination is not accelerated

The International Monetary Fund (IMF) continues to consider that global inflation will be “transitory” but admits that it could be prolonged if global access to vaccines is not accelerated, said its managing director. Kristalina Georgieva.

At the start of the annual meeting of the IMF and the World Bank (WB)Georgieva commented on growing concern about widespread price hikes in many countries.

Precisely, this same Wednesday it was learned that annual inflation in the United States stood at 5.4% in September.

“I anticipate that inflationary pressures will be transitory, but only if vaccines (against COVID-19) and the recovery accelerate,” Georgieva said at the press conference in which he stressed that one of the major factors behind this rise in prices it is the “acute imbalance” between supply and demand in advanced economies.

However, he insisted that IMF estimates suggest that inflation “will begin to decline in mid-2022” in advanced economies towards the range forecast by most central banks of 2% per year.

The words of the director of the IMF coincide with the disclosure of the new inflation data in the United States, which stood at a rate of 5.4% in September, the highest figure in 13 years.

The international financial institution on Tuesday slightly lowered its global growth forecasts for this year to 5.9%, one tenth less than three months ago, due to the delta variant of the coronavirus and problems in global distribution chains.

For his part, he left the world forecasts for 2022 unchanged at 4.9%.

Debt at record levels

This Wednesday, the IMF also released its “Fiscal Surveillance” report in which it warned that the stimuli triggered by the pandemic boosted world debt last year by 14% to a record US $ 226 trillion.

For his part, the director of the IMF’s Fiscal Department, Vítor Gaspar, said that in addition to the “great divergence” in access to vaccines, there is also a “great divergence in financing” with advanced countries receiving more favorable conditions and emerging markets facing “reduced room for maneuver” fiscal.

Overall, Gaspar positively appreciated the efforts made to cushion the economic impact, but stressed that “as debt increases, countries will have to“ calibrate fiscal policies based on their own circumstances, including the vaccination rate and the force of recovery ”.

Data manipulation crisis

Finally, Georgieva commented on the audit which revealed inappropriate pressure from the World Bank to favor China in the Doing Business report on business climate when the Bulgarian economist was working there, and which has once again cast shadows on both bodies.

“There is no doubt about the credibility of the IMF, of our data, of our research. So the problem is on the other side of the street, ”Georgieva pointed out in reference to the WB headquarters, which is located right in front of the IMF in downtown Washington.

The IMF expressed its “full confidence” in Georgieva on Monday after a “thorough” review of allegations of malpractice for having been part of these pressures when she was at the bank in 2017.

Shortly after the decision was known, US Treasury Secretary Janet Yellen said in a statement that there was no reason for Georgieva’s resignation, but warned that the audit had raised “legitimate concerns” and that the IMF and World Bank they should take steps to “reinforce their integrity and credibility.”

The crisis was unleashed on September 16 when the Wilmer Hale law firm disclosed an internal audit of the World Bank in which it indicated that several senior IMF officials, including Georgieva, then put pressure from within the organization in an “undue” way to improve China’s ranking in its regular “Doing Business” report.

The objective was to improve its ranking at a time when the World Bank was seeking Beijing’s support to increase its capital.

As a result of these accusations, the World Bank has canceled the release of the report, one of its most influential publications.