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World faces increasing risk of recession in next 12 months: IMF
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IANS | 14 Jul, 2022
The outlook for the global economy has "darkened significantly" in
recent months, the head of the IMF has warned, and the world faces an
increasing risk of recession in the next 12 months, The Guardian
reported.
The commodity price shock from the war in
Ukraine had exacerbated the cost-of-living crisis for hundreds of
millions of people, Kristalina Georgieva said and it was "only getting
worse".
Inflation was also higher than expected, she said in a
blogpost that came on the same day as the latest figures showed that
prices in the US rose at a 40-year high of 9.1 per cent in June.
Economists
and investors now think the US Federal Reserve could hike interest
rates by a historic 1 per cent when its board meets in two weeks' time,
The Guardian reported.
The Bank of Canada shocked markets on
Wednesday by raising its base rate by a full percentage point, while the
Reserve Bank of New Zealand increased its benchmark rate by 0.5 per
cent this week, as did the Bank of Korea.
Along with another
expected move higher by the Fed, this keeps heaping pressure on other
central banks to follow suit to bring inflation under control.
With
supply bottlenecks and repeated Covid lockdowns in China also crimping
the world's patchy pandemic recovery, Georgieva said the G20 finance
ministers and central bankers gathering in Bali "face a global economic
outlook that has darkened significantly".
"It is going to be a tough 2022 - and possibly an even tougher 2023, with increased risk of recession," The Guardian reported.
The
IMF would be downgrading its growth forecasts for global growth for
both 2022 and 2023 later this month, she said, having warned in April
that its forecast of 3.6 per cent was likely to be revised downwards.
The
European Central Bank is under pressure to raise interest rates to
combat inflation and protect the euro, which this week slumped to parity
with the US dollar for the first time in two decades.
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
|
66.20
|
64.50 |
UK Pound
|
87.50
|
84.65 |
Euro
|
78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
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