Inflation
Turkey’s Erdogan faces tough election amid quake, inflation
Early in his political career, a devastating earthquake and economic troubles helped propel Recep Tayyip Erdogan to power in Turkey. Two decades later, similar circumstances are putting his leadership at risk.
The highly divisive and populist Erdogan is seeking a third consecutive term as president on May 14, after three stints as prime minister, which would extend his rule into a third decade. He already is Turkey’s longest-serving leader.
The presidential and parliamentary elections could be the most challenging yet for the 69-year-old Erdogan. Most opinion polls point to a slight lead by his opponent, Kemal Kilicdaroglu, who heads the secular, center-left Republican People’s Party, or CHP. The outcome of the presidential race could well be determined in a runoff vote May 28.
Erdogan is facing a tough test in this election because of public outrage over rising inflation and his handling of the Feb. 6 earthquake in southern Turkey that killed over 50,000 people, leveled cities and left millions without homes. His political adversaries say the government was slow to respond and that its failure to enforce building codes is to blame for the high death toll.
Some even point to government malfeasance after a 1999 earthquake in northwestern Turkey near the city of Izmit that killed about 18,000 people, saying that taxes imposed from that disaster were misspent and worsened the effects of this year's quake.
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The political party founded by Erdogan in 2001 came to power amid an economic crisis and the Izmit quake. His Justice and Development Party, or AKP, capitalized on public anger over government mishandling of the disaster, and Erdogan became prime minister in 2003 and has never relinquished leadership of the country.
Still, even with resentment directed toward Erdogan over his handling of the February quake and the economy, analysts caution against underestimating him, pointing to his enduring appeal among working- and middle-class religious voters who had long felt alienated by Turkey's former secular and Western-leaning elites.
Erdogan's nationalist policies, often confrontational stance against the West and moves that have raised Islam's profile in the country continue to resonate among conservative supporters. They point to an economic boom in the first half of his rule that lifted many people out of poverty, adding that his past successes are proof of his ability to turn things around.
“There is an economic crisis in Turkey, we can’t deny it. And yes, this economic crisis has had a huge impact on us,” said Sabit Celik, a 38-year-old shop owner selling cleaning products in Istanbul. “But still, I don’t think anyone else (but Erdogan) can come and fix this.”
“I think our salvation is through the (ruling party) again,” he said.
Many also point to major infrastructure projects begun during his tenure — highways, bridges, airports, hospitals, and low-income housing.
Erdogan himself has conceded that there were shortcomings in the early days of the February earthquake but insisted the situation was quickly brought under control.
Since then, he has focused his reelection campaign on reconstructing quake-stricken areas, promising to build 319,000 homes within the year. At rally after rally, he has touted past projects as proof that only his government can restore the region.
Erdogan has announced a series of spending measures to bring temporary relief to those hardest-hit by inflation, including raising minimum wages and pensions, enacting measures to allow some people to take early retirement, and providing assistance to consumers for electricity and natural gas.
He also has focused on the defense sector, boosting production of drones and fighter jets and building an amphibious landing vessel that the government describes as “the world’s first drone carrier.”
“While we were a country that could not even produce pins, an unmanned aerial plane flew above our skies the other day,” said Mustafa Agaoglu, another Erdogan supporter in Istanbul. “We now have our warships, our aircraft carriers, our roads, our bridges, our city hospitals.”
Erdogan has timed a host of openings to coincide with the election campaign. Last month, he presided at a ceremony marking the delivery of natural gas from recently discovered Black Sea reserves, offering free gas to households for a month. This week, he announced the discovery of a new oil reserve in the country's southeast, with a capacity of 100,000 barrels per day.
When he suffered a brief intestinal illness that sidelined him for a few days, he took part via video in an event marking the delivery of fuel to Turkey’s first nuclear power plant.
Then, on Sunday, he said Turkey’s intelligence teams had killed the leader of the Islamic State group in a special operation in northern Syria — an announcement that seemed designed to bolster his image as a strong leader.
In the upcoming election, six parties have united behind his main opponent, Kilicdaroglu, despite their disparate political views. The coalition, known as the Nation Alliance, has vowed to reverse the democratic backsliding and crackdowns on free speech and dissent under Erdogan, seeking to scrap the powerful presidential system he introduced that concentrates vast authority in his hands.
As in previous years, Erdogan has waged a bitter campaign, lashing out at Kilicdaroglu and other opponents. He accused them of colluding with what he calls terrorists. This year, he has also tried to disparage the opposition by saying it supported “deviant” LGBTQ+ rights that he says threaten Turkey's “sacred family structure.”
On Monday, he portrayed the election as a “choice between two futures.”
“Either we will elect those who take care of the family institution, which is the main pillar of society, or those who have the support of deviant minds that are hostile to the family,” Erdogan said.
He has expanded his alliance with two nationalist parties to include two small Islamist parties that call for amendments to a law protecting women against violence, arguing it encourages divorce.
Opposition parties again are complaining of an uneven playing field during the campaign, accusing Erdogan of using state resources as well as his government's overwhelming control over the media.
Some also are questioning whether Erdogan would agree to a peaceful transfer of power should he lose. In 2019, Erdogan challenged the results of a local election in Istanbul after his ruling party lost the mayoral seat there, only to suffer an even more embarrassing defeat in a second balloting.
IMF says inflation to slow growth across Mideast this year
Economies across the Middle East and Central Asia will likely slow this year as persistently high inflation and rising interest rates bite into their post-pandemic gains, the International Monetary Fund said Wednesday.
The IMF's Regional Economic Outlook blamed in part rising energy costs, as well as elevated food prices, for the estimated slower growth. The report said that while oil-dependent economies of the Gulf Arab states and others in the region have reaped the benefits of elevated crude prices, other countries — such as Pakistan — have seen growth collapse after an unprecedented flooding last summer or as economic woes worsened.
The regional slowdown also comes as an explosion of fighting in Sudan between two top rival generals — who only a year ago as allies orchestrated a military coup that upended the African country's transition to democracy — threatens a nation where IMF and World Bank debt relief remains on hold.
Rising interest rates, used by central banks worldwide to try to stem inflation's rise, increase the costs of borrowing money. That will affect nations carrying heavier debts, the IMF warned.
Also Read: IMF satisfied with progress of BBS’ GDP and inflation data updated under new method
“This year we’re seeing inflation again being the most challenging issue for most of the countries," Jihad Azour, the director of the Middle East and Central Asia Department at the IMF, told The Associated Press. "For those who have high level of debt, the challenge of increase in interest rate globally, as well as also the tightening of monetary policy, is affecting them.”
The IMF forecast predicts regional growth will drop from 5.3% last year to 3.1% this year. Overall, regional inflation is expected to be at 14.8%, unchanged from last year, as Russia's war on Ukraine continues to pressure global food supplies and affect energy markets.
It will be even worse in Pakistan, where the IMF projected inflation to more than double, to about 27%. Pakistan and IMF officials have held repeated talks over the release of a stalled key tranche of a $6 billion bailout package loan to Islamabad.
The IMF warned that financial conditions worldwide will tighten this year, brought on in part by two bank failures in the United States in March. The sudden collapse of Credit Suisse before it was purchased by UBS also strained markets.
For Sudan, Azour acknowledged the challenge as the country faces a humanitarian crisis brought on by the weeks of fighting there. The violence has also worsened a debt crisis that has gripped the country for decades as it faced Western sanctions.
“We have worked with the government of Sudan, for the Sudanese people, in order to help them by achieving a debt operation that would allow Sudan to have a debt relief of more than $50 billion," Azour said.
"But unfortunately, the recent developments ... put in a halt to all of of those efforts,” he added.
UK inflation jumps to 10.4%, surprising analysts
Britain’s inflation rate rose for the first time in four months in February, surprising analysts and increasing pressure on the Bank of England to raise interest rates at its meeting on Thursday.
The consumer price index jumped to 10.4% in the 12 months through February from 10.1% the previous month, as high energy prices continued to squeeze household budgets, the Office for National Statistics said Wednesday.
While economists expect prices to drop rapidly later this year, inflation is more than five times higher than the Bank of England’s 2% target.
The central bank will weigh the need to control inflation against concerns about the fallout from global banking troubles when it decides whether to raise interest rates on Thursday. The bank has approved 10 consecutive rate increases since December 2021, pushing its key bank rate to 4%.
Michael Hewson, chief analyst at CMC Markets UK, said he expects the Bank of England to raise rates by at least a quarter of a percentage point.
“A base rate of 4% barely seems adequate to act as a drag on this measure of price rises and will still increase the pressure on the Bank of England” to raise rates on Thursday, Hewson said in a note to clients before the inflation figures were released.
‘Eat chicken feet’: Egypt’s govt recommendation faces vehement criticism from citizens
A recommendation from Egypt’s government – to eat chicken feet – has come under vehement criticism from the country’s citizens.
Egypt, the most populous country in the Arab world, is currently experiencing a record currency crisis and the highest inflation in five years, which has made food so costly that many Egyptians are no longer able to purchase chicken, a staple item.
The most recent dietary advice from the state recommended preparing chicken feet, a protein-rich part of the bird that is often kept for dogs and cats, according to a BBC report published yesterday.
Egypt is one of the countries suffering the most from skyrocketing inflation, which surpassed 30 percent in March.
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Cooking oil and cheese, which were once reasonable necessities for many, have become unaffordable luxuries. Some product prices have doubled or tripled within a matter of months.
The BBC report quoted Wedad, a mother of three in her 60s, as saying: “I eat meat once a month, or I don’t buy it at all. I buy chicken once a week.”
Egypt is under a lot of strain in part because it relies significantly on imported food rather than homegrown agriculture to support its over 100 million-strong population.
Even the grain used to feed the chicken is imported.
Read More: Why another high inflation report may not cause Fed to hike
In comparison to the US dollar, the Egyptian pound lost half of its value over the course of a year. As the government depreciated the currency once more in January, the price of imports such as grain rose dramatically.
President Abdel Fattah el-Sisi frequently attributes his country's present economic troubles on the chaos that preceded the 2011 Egyptian revolt and fast population growth. In addition, he mentions the epidemic that followed the conflict in Ukraine.
The Russian invasion of Ukraine had a devastating effect on Egyptian economy. Egypt is the second largest wheat importer in the world, and the two countries were its principal suppliers. As a result of the disruption of exports due to the war, price of wheat and bread skyrocketed.
Russian and Ukrainian tourists used to visit Egypt in droves; the tourism industry has also suffered financial losses. Tourism, which used to account for around 5% of Egypt’s GDP, has been severely impacted by the Covid-19 pandemic.
Read More: In the EU’s inflation crisis, the humble egg takes the cake
Egypt has requested a bailout from the International Monetary Fund four times in the previous six years due to its economic difficulties. These debts, which account for 90% of GDP, consume nearly half of the state’s revenues.
Gulf nations such as the United Arab Emirates and Saudi Arabia have purchased state assets and are aiding Egypt, but they have also toughened their requirements for future investments.
Why another high inflation report may not cause Fed to hike
The government inflation report being released Tuesday is expected to show that price acceleration in the United States remained chronically high in February, putting the Federal Reserve in an unusually tough position.
The Fed had been considered sure to raise its benchmark interest rate by at least a quarter-point when it meets next week. Many analysts even expected an aggressive half-point hike if Tuesday’s report for February pointed again to elevated inflation. But that was before last weekend’s two major bank failures and a series of emergency measures that the Fed unveiled to try to bolster confidence in the financial system.
With bank share prices cratering Monday and fears of further financial instability roiling markets, most economists now expect the Fed to pause its rate hikes next week to avoid causing any further instability at a delicate moment for the banking system.
At the same time, inflation continues to run far above what the Fed wants. Economists have estimated that Tuesday’s report will show that consumer prices rose 0.4% from January to February, according to a survey of economists by the data provider FactSet. That would be slightly less than the increase from December to January but still too fast to be consistent with the Fed’s 2% annual inflation target.Economists have predicted that compared with a year ago, overall inflation rose 6% in February, down from a 6.4% year-over-year jump in January. They have also estimated that so-called core prices, which exclude volatile food and energy costs, rose 5.5% from a year earlier. That would be only slightly below January’s annual pace of 5.6%.
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Jan Hatzius, chief economist at Goldman Sachs, said Goldman now thinks the Fed’s policymakers will pause their rate increases next week. Goldman had previously predicted a quarter-point hike. In a note to clients, Hatzius noted that the Fed, for now, appears even more focused on calming the banking sector and the financial markets than on fighting inflation.
“We would be surprised if, just one week after going to great lengths to support financial stability, policymakers risked undermining their efforts by raising interest rates again,” Hatzius wrote in a separate note Monday.
If the Fed does pause its rate hikes this month, Hatzius predicted, it will likely resume them when it next meets in May. Ultimately, he still expects the Fed to raise its key rate, which affects many consumer and business loans, to about 5.4% this year, up from the current 4.6%.
The Fed may get some unintentional help in its inflation fight from the aftereffects of the collapse of Silicon Valley Bank and New York-based Signature Bank. In response, many small and medium-size banks may pull back on lending to shore up their finances. A lower pace of lending could help cool the economy and slow inflation.
The possibility of a Fed pause underscores the sharp shift in the nation’s financial system and economy in barely one week. Last Tuesday, Fed Chair Jerome Powell had told the Senate Banking Committee that if hiring and inflation continued to run hot, the Fed would likely raise rates at this month’s meeting by a sizeable half-point. That would have marked a re-acceleration in the Fed’s efforts to tighten credit. The central bank had raised its benchmark rate by a quarter-point in February, a half-point in December and by three-quarters of point four times before that.
The next day, testifying to a House committee, Powell cautioned that no final decision had been made about what the Fed would do at the March meeting. Still, on Friday, the government reported that employers added a robust 311,000 jobs last month. It was a potential sign of continued high inflation, and it led to predictions of a half-point hike at the Fed’s meeting next week.
Later that day, though, Silicon Valley Bank failed, thrusting an entirely new set of concerns onto the Fed.
In the EU’s inflation crisis, the humble egg takes the cake
The humble egg has become a star performer for all the wrong reasons as inflation has hit households across the European Union extremely hard over the year.
The EU's statistical agency Eurostat announced Friday that the average price of an egg — that important staple for poor families and gourmet cooks alike — had risen by 30% over the year to January 2023, becoming a symbol of how the cost of living has hit everyone in the 27-nation bloc.
Even if the latest inflation figures show that annual inflation in the 20-nation eurozone has started to decline to 8.5% in February, the sector of food, alcohol and tobacco continued to rise and stood at 15%.
Also Read: European inflation eases for 3rd month but prices still bite
And then, eggs outperform just about all. Two years ago, egg inflation still stood at a lean 1%, rising to 7% the year after before reaching 30% in February.
Egg prices were whipped up the most in the Czech Republic, rising 85% over the year, followed closely by two other central European nations — Hungary (80%) and Slovakia (79%). Germany and Luxembourg stood at the other end, with both experiencing a relatively lower increase of 18%.
In the United States, egg prices have surged over the past year because of the ongoing bird flu outbreak and the highest inflation in decades. The national average retail price of a dozen eggs hit $4.25 in December, up from $1.79 a year earlier, according to the latest government data.
Economic crisis, inflation leave public life in the lurch: BNP
BNP on Tuesday voiced concern that the ongoing economic crisis and growing inflation have turned into a national crisis, leaving common people in the lurch.
Speaking at a press conference at the BNP chairperson’s Gulshan office, party Secretary General Mirza Fakhrul Islam Alamgir also said the nation will not get rid of the ongoing economic crisis unless the ‘corrupt and incompetent’ Awami League government is removed from power.
“The people of the country are living a miserable life due to increasing price inflation of daily necessities, including, electricity, fuel, transportation, and food. Almost all macroeconomic indicators are becoming weaker and acute,” he said.
In present-day Bangladesh, the BNP leader said there is only screaming all around for want of food and money. “The entire country has become a kingdom of scarcity. People are facing a suffocating situation, due to the high prices of everyday goods. Thus, the country's economy has plunged into a great crisis."
Also Read: Seeking grassroots support, BNP to march at thana-level of cities March 4
He said the government has shown the inflation rate was 9.52 percent in August last but the non-food inflation is hovering around double digits. “In January, this rate was 9.8 percent.”
Fakhrul said the prices of all goods in the market are gradually going up. “The prices of rice, lentils and eggs are skyrocketing while the per kg of broiler chicken is now over Tk 200. But the government's Bureau of Statistics (BBS) shows general price inflation at 8.57 percent and food inflation at 7.76 percent. The economists are expressing doubt about the data.”
He alleged that an economic anarchy has been created in the country because of repeated increase in electricity and gas prices, dwindling reserves, unprecedented dollar crisis and devaluation of money against the dollar, mismanagement in banking and financial sector, wrong policies, rampant corruption, siphoning off money abroad, increase in loan defaults, economic income inequality, lack of good governance and lack of democracy.
Coming out of its usual denial syndrome, the government was forced to admit the persisting economic crisis in the country in its letter sent to the IMF, the BNP Secretary General said. “The government is taking loans from the IMF on tough conditions to deal with the situation. In other words, they are now relying on borrowing from banks and IMF loans.”
He said the government does not want to acknowledge the country's economic crisis as it has no accountability. “They’re not elected by the people and public votes.”
The BNP leader said the government is always running a false campaign through the media by spreading fear among journalists and establishing its control on the press. “This propaganda is essential for those who are fascists and dictators to give people a false impression.”
Replying to a question, he said the current government must quit power to overcome the current economic crisis. “When this regime will go, the competent people can work and take effective steps to resolve the problems.”
Following IMF advice BBS to calculate inflation on a new base year from March
Bangladesh Bureau of Statistics (BBS) is making radical changes in the inflation calculation considering the present financial situation and the IMF suggestions.
The inflation will be calculated for the base year 2021–22 instead of the existing base year of 2005-06, which will be more accurate as lifestyle and consumer behaviors made a big change in the present time, the BBS sources said.
According to the BBS, in the new base year, the changes in consumption patterns of people during the last one and a half decade have been prioritized. For example, in the base year 2005-06, inflation was calculated using only 426 goods and services. About 300 more products and services are increasing in the new base year.
There will be a total of 722 products and services as new, which will be calculated by taking 100 points and the contribution of these products to inflation.
In this case, the contribution of rice will be 13. The remaining 721 products and services contributed 87. For the first time, the contribution of non-food products and services is crossing 50 percent. This means people spend more on consuming other goods and services than buying food, BBS official said.
Read more: Bangladesh Bank unveils cautionary monetary policy to curb inflation and exchange rate
Former chairman of NBR Dr. Muhammad Abdul Mazid told UNB that a new base year is definitely needed. But the list of food products should be changed drastically.
“Around 80 percent of the current diet is carbohydrate-based foods. Food products should be listed with nutritional values rather than calories. This needs to be openly discussed with all stakeholders,” he said.
Inflation has been high in the last six months due to Covid-19 pandemic and the Ukraine-Russia war. Since then, economists are arguing that the current system does not capture the correct picture of inflation.
They believed that the inflation is actually higher.
Meanwhile, the government has committed to the International Monetary Fund (IMF) to change the base year in inflation calculations.
According to this reform proposal, the BBS will calculate inflation from the new base year and method from next July. As a result, the BBS officials expect that the consumption and consumption trends of people will be illustrated more clearly.
In addition, officials believe that long-held doubts among many economists about inflation calculations will be diminished, the BBS official said.
The BBS has already been changed to a base year and the list of goods and services has made finalized. The pilot program for calculating inflation in the new base year will begin next month.
European inflation eases for 3rd month but prices still bite
Europe's inflation rate dipped at the start of the year, giving some relief to consumers but still leaving them facing higher prices that have driven protests and will likely press the European Central Bank into another interest rate hike Thursday.
The consumer price index for the 20 countries that use the euro currency reached 8.5% in January compared with a year earlier, European Union statistics agency Eurostat said Wednesday. That's down from the annual rate of 9.2% in December.
It's the first report on consumer prices that includes data from Croatia, which joined the eurozone on Jan. 1, but lacked unavailable figures from Germany, Europe's biggest economy. Inflation in Europe has now slowed for the third month in a row, falling from a record high of 10.6% in October.
Food and energy prices are persisting as the major factors driving up European inflation. Prices for food, alcohol and tobacco rose at a 14.1% annual pace in January, while energy prices rose 17.2%.
Russia's war in Ukraine has shaken up food and energy markets, and while commodity prices have fallen from all-time highs last year, consumers are not yet seeing relief on their utility and grocery bills.
Natural gas prices have dropped from records last summer thanks to a scramble to find supplies outside Russia and warmer winter weather that eased energy demand for heating. While Europe may have dodged fears of energy rationing and shortages after Russia cut off most supplies, natural gas prices are still three times higher than before Russia started massing troops on Ukraine’s border.
The energy upheaval has made the cost-of-living squeeze more painful in continental Europe and the United Kingdom than in the U.S., leading to protests and strikes from workers in several countries seeking pay that keeps pace with inflation.
U.S. annual inflation dropped to 6.5% in December, while the U.K. reading of 10.5% signaled how the British economy was a striking exception to the International Monetary Fund's brighter outlook for 2023.
Read more: Europe's inflation slows again but cost of living still high
In the eurozone, so-called core inflation, which doesn't include volatile food and energy costs, held steady at 5.2% last month, underlining how prices also are rising for both services and goods such as clothing, appliances, cars and computers.
Germany’s inflation number wasn’t available because of a technical issue so an estimate was used. Economists said that means the inflation figure should be taken with a pinch of salt.
Still, “when it comes to monetary policy, this is just noise,” Jack Allen-Reynolds of Capital Economics said in a report. “The core inflation rate is sending a clear signal: underlying price pressures remain strong.”
With inflation far above its target of 2%, the ECB has been raising interest rates that make it more expensive for consumers to borrow money. Aiming to get price spikes under control, the central bank is expected to institute another half-point hike Thursday.
That will come a day after a decision by the U.S. Federal Reserve and the same day the Bank of England acts on borrowing costs.
The central bank moves to cool inflation also strain the economy, with Europe eking out just 0.1% growth in the final three months of last year and 3.5% for all of 2022. That outpaced the 2.1% expansion in the U.S. and China’s 3% growth last year.
IMF now expects world economy to grow 2.9% in 2023
The outlook for the global economy is growing slightly brighter as China eases its zero-COVID policies and the world shows surprising resilience in the face of high inflation, elevated interest rates and Russia's ongoing war against Ukraine.
That's the view of the International Monetary Fund, which now expects the world economy to grow 2.9% this year. That forecast is better than the 2.7% expansion for 2023 that the IMF predicted in October, though down from the estimated 3.4% growth in 2022.
The IMF, a 190-country lending organization, foresees inflation easing this year, a result of aggressive interest rate hikes by the Federal Reserve and other major central banks. Those rate hikes are expected to slow the consumer demand that has driven prices higher. Globally, the IMF expects consumer inflation to decelerate from 8.8% last year to 6.6% in 2023 and 4.3% in 2024.
A big factor in the upgrade to global growth was China’s decision late last year to lift anti-virus controls that had kept millions of people at home. The IMF said China’s “recent reopening has paved the way for a faster-than-expected recovery.’’
Read more: UN forecasts fall in global economic growth to 1.9% in 2023
The IMF now expects China's economy — the world’s second-biggest, after the United States — to grow 5.2% this year, up from its October forecast of 4.4%. Beijing's economy eked out growth of just 3% in 2022 — the first year in more than 40, the IMF noted, that China has expanded more slowly than the world as a whole. But the end of virus restrictions is expected to revive economic activity in 2023.
The IMF's 2023 growth outlook improved for the United States (forecast to grow 1.4%) as well as for the 19 countries that share the euro currency (0.7%). Europe, though suffering from energy shortages and higher prices resulting from Russia's invasion of Ukraine, proved “more resilient than expected,’’ the IMF said. The European economy benefited from a warmer-than-expected winter, which held down demand for natural gas,
Russia's economy, hit by sanctions after its invasion of Ukraine, has proved sturdier than expected, too: The IMF's forecast foresees Russia registering 0.3% growth this year. That would mark an improvement from a contraction of 2.2% in 2022. And it's well above the 2.3% contraction for 2023 that the IMF had forecast for Russia in October.
The United Kingdom is a striking exception to the IMF's brighter outlook for 2023. It has forecast that the British economy will shrink 0.6% in 2023; in October, the IMF had expected growth of 0.3%. Higher interest rates and tighter government budgets are squeezing the British economy.
Read More: Global economic growth will slow down in 2023, but will pick up in 2024: IMF chief
“These figures confirm we are not immune to the pressures hitting nearly all advanced economies,’’ Chancellor of the Exchequer Jeremy Hunt said in response to the IMF forecast. “Short-term challenges should not obscure our long-term prospects — the U.K. outperformed many forecasts last year, and if we stick to our plan to halve inflation, the U.K. is still predicted to grow faster than Germany and Japan over the coming years.”
The IMF noted that the world economy still faces serous risks. They include the possibility that Russia's war against Ukraine war will escalate, that China will suffer a sharp increase in COVID cases and that high interest rates will cause a financial crisis in debt-laden countries.
The global outlook has been shrouded in uncertainty since the coronavirus pandemic struck in early 2020. Forecasters have been repeatedly confounded by events: A severe if brief recession in early 2020; an expectedly strong recovery triggered by vast government stimulus aid; then a surge in inflation, worsened when Russia's invasion of Ukraine nearly a year ago disrupted world trade in energy and food.
Three weeks ago, the IMF’s sister agency, the World Bank, issued a more downbeat outlook for the global economy. The World Bank slashed its forecast for international growth this year by nearly half — to 1.7% — and warned that the global economy would come “perilously close’’ to recession.
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