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Mumbai, The <keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords" meta.keywordsubtype="org" meta.entityname="RBI" meta.hostid="261" meta.entityid="RBI">RBI</keyword> expects the price of the Indian basket of <keyword id="20023856" type="General" weightage="20" keywordseo="crude-oil-imports" source="keywords">crude oil imports</keyword> to be around $85 per barrel going ahead amid geopolitical tensions which have "imparted significant uncertainty" to the outlook. India exports around 85 per cent of its crude requirement, and soaring oil prices which have often crossed the $90 a barrel mark in recent years, tend to drag down the economy. The RBI's monetary policy report released on Friday states that international crude prices exhibited sizeable two-way movements in the second half of 2023-24, falling in October-December 2023 to around $75 per barrel on slowing global demand amidst weak manufacturing activity and easing demand for transportation fuels as well as supply increases from non-OPEC countries. However, amidst intensifying hostilities in the <keyword id="19904316" type="General" weightage="20" keywordseo="middle-east" source="keywords">Middle East</keyword>, deep output cuts by OPEC plus cartel, and incidents of supply outages, international crude prices moved higher from mid-December reaching an average close to $85 per barrel in March, the report points out. "The spread between global petroleum product prices and crude prices eased from its recent peaks in mid-2022 but remains elevated by historical standards in view of demand-supply refinery mismatches. Taking into account these factors, the baseline assumption for the crude price (Indian basket) is retained at $85 per barrel," the report states. Regarding the outlook for the rupee, the report states that the nominal exchange rate of the Indian currency saw two-way movements in the range of Rs 82.8-83.4 per US dollar in the second half of 2023-24. Taking into consideration the uncertainty around US dollar movements, the ebbs and flows of global capital flows and international crude oil prices, the baseline assumption for the exchange rate is revised to Rs 83 per US dollar. It also sees as a positive factor in the global growth forecast for 2024 being revised upwards by 20 bps to 3.1 per cent by the <keyword id="19916590" type="General" weightage="20" keywordseo="international-monetary-fund" source="keywords">International Monetary Fund</keyword> (IMF) in its January 2024 update of the <keyword id="20389978" type="General" weightage="20" keywordseo="world-economic-outlook" source="keywords">World Economic Outlook</keyword> (WEO) from its October 2023 projection. Global economic growth is expected to increase marginally to 3.2 per cent in 2025 and global trade growth (goods and services combined) is projected to accelerate from 0.4 per cent in 2023 to 3.3 per cent in 2024 and further to 3.6 per cent in 2025. However, the headwinds from protracted geopolitical tensions and increasing disruptions in trade routes pose risks to India's growth outlook, according to the report. Taking all these factors into consideration, India's real GDP growth for 2024-25, is projected at 7.0 per cent, with Q1 at 7.1 per cent; Q2 at 6.9 per cent; Q3 at 7.0 per cent; and Q4 also at 7.0 per cent. The risks are evenly balanced, the report adds.

RBI sees price of India's crude oil imports at $85 a barrel in FY25

<ul class="summary-list"><li>Traders and central banks should increase exposure to gold, Bank of America says.</li><li>The strategists say Treasurys face risks as US debt levels soar. </li></ul>Gold is increasingly attractive as other traditional "safe haven" assets face mounting risks, Bank of America strategists said.The strategists said investors, including central banks, should rotate into the precious metal, which bulls tout as a hedge against inflation and debt debasement resulting from rising government borrowing. "Gold looks to be the last 'safe haven' asset standing, incentivising traders including central banks to increase exposure," the strategists said in a Wednesday note.They explained that with US debt expected to keep soaring, Treasury supply faces risks. At the same time, higher interest rate payments as a share of GDP will make gold an attractive asset in the next few years.Rising spending is alson't merely a US issue. The analyst notes that the International Monetary Fund predicts new spending could amount to 7%-8% of global GDP annually by 2030. "Ultimately, something has to give: if markets become reluctant to absorb all the debt and volatility increases, gold may become the asset of choice. Central banks in particular could further diversify their currency reserves," the analysts wrote. With neither candidate for the upcoming US presidential election prioritizing fiscal discipline and a pullback in spending, national debt is projected to hit a record high as a share of the economy in the next three years, the analysts said.That will increase interest payments as a share of GDP, making gold an attractive asset amid concerns that markets won't be able to absorb new debt, they add."Indeed, with lingering concerns over US funding needs and their impact on the US Treasury market, the yellow metal may become the ultimate perceived safe haven asset," the analysts said.The analysts reaffirmed their target of $3,000 an ounce for gold by the end of next year, which implies 11.1% upside from levels on Thursday. The analysts' bullishness for the metal comes as worries grow over mounting spending and debt around the world. Investors have increasingly looked to gold in recent weeks as the Federal Reserve kicked off its easing cycle with a 50-basis point interest rate cut last month, driving the price of gold to gain around 4.3% in the last month.Central banks around the world have also increased their share of gold as a portion of total reserves. The Bank of America analysts note that gold now makes up 10% of central bank reserves, up from 3% a decade ago.

Gold is the 'last safe haven' as Treasurys face risks from soaring US debt, Bank of America says

<ul class="summary-list"><li>Dollar dominance faces key challenges in the future, Brookings researchers said.</li><li>The think tank pointed to four forces that could be make the greenback less attractive. </li></ul>There are a handful of challenges to the dollar's top status in financial markets, according to researchers from the Brookings Institution.In a recent <a target="_blank" class="" href="https://www.brookings.edu/articles/the-changing-role-of-the-us-dollar/">note</a>, the think tank pointed to the US dollar's shifting status in global financial markets, with the use of the <a target="_blank" class="" href="https://www.businessinsider.com/dedollarization-imf-stealth-erosion-global-us-dollar-forex-reserves-sanctions-2024-6">greenback declining steadily </a>over the past several decades. While the <a target="_blank" class="" href="https://markets.businessinsider.com/news/currencies/dedollarization-dollar-dominance-currency-war-trade-usd-reserves-explained-2024-5">dollar still dominates</a> central bank reserves and world trade, the currency accounted for 59% of all global reserves at the start of 2024, down from 71% of reserve in 1999, according to estimates from the International Monetary Fund.<div type="image" title="Dollar's share of global reserves graph" height="1138" width="1145" msid="112816893" hostid="261" sizebytes="59508"></div>Meanwhile, the share of nontraditional currency reserves has edged higher. Currencies like the Australian dollar, the Swiss franc, and Chinese yuan accounted for 11% of all central bank reserves at the start of this year, up from 2% recorded in 1999, per IMF data.<div type="image" title="Share of nontraditional currency reserves" height="1162" width="1151" msid="112816894" hostid="261" sizebytes="62210"></div>That decline has sparked some fear among investors that the dollar could soon be ousted from its top-dog position in financial markets. While most experts say that <a target="_blank" href="https://markets.businessinsider.com/news/currencies/de-dollarization-dollar-war-usd-yuan-china-russia-brics-currency-2024-7">likely isn't happening anytime soon</a>, the think tank said the dollar's dominant status faces key challenges, pointing to four factors in particular.<h2 id="eb86da1f-7f18-4189-b9a3-3748f015a7bb">1. US sanctions</h2>The US began implementing sanctions on Russia and its allies after Moscow began its invasion of Ukraine in 2022. That's sparked a de-dollarization drive in Russia and other BRICS nations, which have suggested they're looking to shift away from the dollar as a reaction to Western trade restrictions.Russia, in particular, has taken steps to heavily de-dollarize its economy, with the nation adopting a <a target="_blank" href="https://www.businessinsider.com/dedollarization-russia-china-yuan-ruble-exchange-rate-benchmark-new-sanctions-2024-6">yuan-to-ruble exchange rate</a>, proposing a <a target="_blank" href="https://markets.businessinsider.com/news/currencies/de-dollarization-dollar-dominance-currencies-brics-china-russia-india-putin-2023-7">rival currency to the greenback</a>, and reportedly spearheading an <a target="_blank" href="https://www.businessinsider.com/dedollarization-russia-actively-working-brics-local-currencies-platform-us-dollar-2024-6">alternative payment platform</a> that wouldn't be reliant on the dollar.China, which saw its companies hit with <a target="_blank" href="https://home.treasury.gov/news/press-releases/jy2546">secondary sanctions</a> from the US Treasury last week, has also signaled a shift away from the dollar, <a target="_blank" class="" href="https://www.businessinsider.com/dedollarization-china-yuan-cny-trade-usd-sanctions-protection-reserve-currency-2024-5">promoting its yuan as an alternative</a>."If the United States is capricious with sanctions, acts unilaterally, and fails to develop a doctrine of economic statecraft, the dollar could be dethroned," Brookings researchers said, citing <a target="_blank" class="" href="https://www.businessinsider.com/economic-sanctions-russia-us-dollar-dominance-yellen-alternative-yuan-dedollarization-2023-4">comments</a> from US Treasury Secretary Janet Yellen.<h2 id="eff7251a-f1be-40d0-8494-5988c77ddab7">2. US debt</h2>The US's rising debt load could make currency holders more wary of the dollar, especially if there are concerns that the US may not be able to pay back its dues.While the US debt balance hasn't yet breached unsustainable levels, the government's rapid pace of spending has done little to ease markets. Fitch, for instance, <a target="_blank" href="https://www.businessinsider.com/fitch-downgrades-us-credit-rating-deficit-debt-ceiling-2023-8#:~:text=Fitch%20downgraded%20the%20US's%20credit,the%20debt%20limit%20until%202025.">downgraded the US</a><a target="_blank" class="" href="https://www.businessinsider.com/fitch-downgrades-us-credit-rating-deficit-debt-ceiling-2023-8#:~:text=Fitch%20downgraded%20the%20US's%20credit,the%20debt%20limit%20until%202025."> credit rating</a> last year, citing a "steady deterioration in standards of governance.""Bickering over appropriations, Congress has shut the government down several times. Further political instability could erode investor confidence in the dollar," the researchers said.<h2 id="c18d8d68-8ac9-451c-b2c2-8ff5942f963f">3. Improved payment technology</h2>More advanced payment systems have made it easier to exchange nontraditional currencies. That could weigh on demand for the US dollar, which has traditionally been seen as the most attractive medium of exchange."Typically, converting such currencies to dollars, and vice versa, has been easier and cheaper than exchanging them for one another. But China and India, for example, will soon no longer need to exchange their respective currencies for dollars to conduct trade cheaply. Rather, exchanging renminbi for rupees directly will become cheaper. Consequently, the reliance on 'vehicle currencies,' particularly the dollar, will decline," Eswar Prasad, a senior fellow at the Brookings Institution, said in a previous note.<h2 id="0b9967af-c144-471b-8ee3-4faf7baad925">4. Central bank digital currencies</h2>Digital currencies issued by central banks could also make it easier and cheaper to nontraditional currencies. China is developing one such <a target="_blank" class="" href="https://markets.businessinsider.com/news/currencies/dollar-dominance-outlook-china-india-digital-currency-race-fed-innovation-2024-1">CBDC</a>, and CIPS, China's Cross-border Interbank payment system, has been "growing rapidly" over the past few years, the think-tank noted.The Fed has created its own instant payment network, but hasn't moved to create a CBDC, with Powell suggesting last year that a <a target="_blank" class="" href="https://www.federalreserve.gov/faqs/is-fednow-replacing-cash-is-it-a-central-bank-digital-currency.htm">digital currency would require approval from lawmakers</a>. That means the US risks falling behind other countries, where digital payment tech is rapidly developing, Brookings researchers said.Still, despite warnings, most currency experts <a target="_blank" class="" href="https://markets.businessinsider.com/news/currencies/de-dollarization-dollar-war-currency-usd-dominance-china-yuan-economy-2024-5">do not believe de-dollarization</a> is a near-term threat to the US or its currency. At the moment, there are no close competitors to the greenback in financial markets — and countries that try to de-dollarize anyway <a target="_blank" class="" href="https://markets.businessinsider.com/news/currencies/de-dollarization-dollar-war-usd-yuan-china-russia-brics-currency-2024-7">risk a host of economic consequences</a>, like slower growth and lost investment value, one commodities vet told Business Insider.

The 4 forces that will challenge the dominance of the dollar, according to economic researchers

Price pressures seem entrenched in many economies, including <keyword id="6359891" type="General" weightage="20" keywordseo="emerging-markets" source="Orion">emerging markets</keyword>, and upside <keyword id="22195" type="General" weightage="20" keywordseo="inflation" source="Orion">inflation</keyword> risks are sizeable, said <keyword id="154034" type="General" weightage="20" keywordseo="Gita-Gopinath" source="Orion">Gita Gopinath</keyword>, First Deputy Managing Director at <keyword id="6366068" type="General" weightage="20" keywordseo="international-monetary-fund" source="Orion">International Monetary Fund</keyword> (IMF), adding that central banks must keep their monetary policies tight. Gopinath was addressing the Annual Conference of the Central Bank of Brazil in Brasilia on Wednesday (local time). "...markets are probably too optimistic about what it will take to bring down inflation in EMs. Despite encouraging signs, I am worried that price pressures seem entrenched in many economies and that upside inflation risks are sizeable," she said at the conference. Hence, she said central banks must remain resolute in keeping policies tight and recognize that insufficient monetary tightening now may necessitate even more painful actions down the road - a lesson from the high inflation period of the 1970s that very much applies today. "Fiscal restraint can help support the fight against inflation by central banks. And financial tools--judiciously used--can improve trade-offs in the event of pronounced financial stress." She stressed on the fact that challenges are global, but are more heightened for emerging markets. Hence, it is critical for emerging market authorities to refine and strengthen their monetary, fiscal, and financial policy frameworks. However, there is a silver lining for the emerging markets as they have thus far proven resilient to their own policy tightening and tightening by advanced economies, where rates have risen at the sharpest pace in several decades. The US central bank's current policy rate, which is now in a target range of 5.0-5.25, is the highest in several years, and notably, it was near zero in the early part of 2022. Raising <keyword id="6371181" type="General" weightage="20" keywordseo="interest-rates" source="Orion">interest rates</keyword> typically helps in cooling demand in the economy and thus helps in managing inflation. Growth in emerging markets remained strong through last year and is expected to hold up reasonably well this year, while capital outflows have been limited, Gopinath added. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/banks/news/sbi-q4-2022-23-results-indias-largest-lender-posts-highest-ever-quarterly-net-profit-of-16695-crore/articleshow/100327874.cms">SBI Q4 results: India’s largest lender posts record quarterly net profit of ₹16,695 crore, up 83% YoY</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/ethnic-apparel-brand-manyavars-stock-under-pressure-as-promoter-to-offload-stake/slidelist/100324527.cms">Ethnic apparel brand Manyavar’s stock under pressure as promoter to offload stake</a>

Upside risks for inflation sizable, central banks must stay resolute: IMF's Gita Gopinath

<ul class="summary-list"><li>De-dollarization is nothing but a myth — and it could backfire on countries like Russia and China.</li><li>That's according to Jeffrey Christian, a commodities expert who thinks dollar dominance isn't going away anytime soon.</li></ul>De-dollarization is probably a fad — and countries trying to stage a <a target="_blank" class="" href="https://www.businessinsider.com/us-dollar-war-global-fight-america-economy-dominance-reserve-currency-2023-7">global shift away from the dollar</a> may soon find that the movement will backfire.That's according to Jeffrey Christian, a longtime commodities analyst and the founder of CPM Group, who thinks that the <a target="_blank" class="" href="https://www.businessinsider.com/dedollarization-russia-actively-working-brics-local-currencies-platform-us-dollar-2024-6">de-dollarization push</a> in countries like Russia, China, and India could wind up backfiring and hurting the economies of those nations.Despite the ongoing movement, dollar dominance isn't probably going away, given how pervasive the greenback is in financial markets, he told Business Insider in an interview."I would think that de-dollarization is a dream some of us have," Christian said. "It's the idea of moving to this multi-international currency regime. It's a great idea, but the logistics of it happening are extremely daunting because all of the governments and countries would have to change the way they deal with currencies."<h2 id="267ed7d5-8da7-4661-88b2-ba954931f9c6">Nothing but a buzzword</h2>Christian is among a group of <a target="_blank" class="" href="https://markets.businessinsider.com/news/currencies/de-dollarization-dollar-war-currency-usd-dominance-china-yuan-economy-2024-5">de-dollarization skeptics</a> on Wall Street, who have brushed aside the trend as nothing more than a buzzword. De-dollarization is a "<a target="_blank" class="" href="https://markets.businessinsider.com/news/currencies/dedollarization-dollar-dominance-currency-war-trade-usd-reserves-explained-2024-5">myth</a>," "nonsensical," and a "bad joke," Christian told clients in a presentation earlier this year, adding that he didn't take fears about the dollar being displaced by another currency too seriously.That's partly because countries that are "adamant" about not using the dollar face a series of economic consequences, he told BI, pointing to three consequences in particular:<h3 id="ca391d02-a220-4f09-9a1d-b2ec50b542f0">1. Payment Issues</h3>First, de-dollarizing nations run a higher risk of payment issues, Christian said. He pointed to India, which insisted on <a target="_blank" href="https://www.businessinsider.com/dedollarization-russia-fraught-india-rupee-oil-trade-warning-us-dollar-2023-11#:~:text=Russia's%20oil%20trade%20with%20India,rate%20on%20the%20open%20market.">purchasing Russian oil in rupees and dirhams</a> — the UAE's currency — last year. Traders said that caused at least <a target="_blank" href="https://markets.businessinsider.com/news/commodities/russia-oil-india-ships-moscow-us-sanctions-ukraine-war-revenue-2024-1">seven India-bound oil ships to turn back to Russia</a>, Reuters originally reported.Payment squabbles stem from the fact that other currencies are not nearly as liquid as the dollar, as the greenback is so widely used in global markets and held among central banks.The dollar was used in 88% of all daily currency transactions as of April 2022, according to the <a target="_blank" class="" href="https://www.bis.org/statistics/rpfx22.htm">Bank of International Settlements</a>, and it accounted for 54% of all foreign exchange reserves, <a target="_blank" class="" href="https://data.imf.org/?sk=E6A5F467-C14B-4AA8-9F6D-5A09EC4E62A4">International Monetary Fund</a> data shows.Other currencies, like China's yuan, are bound by <a target="_blank" class="" href="https://www.businessinsider.com/dedollarization-china-yuan-cny-trade-usd-sanctions-protection-reserve-currency-2024-5">strict capital controls</a>, which also make them less liquid and, therefore, less attractive than the dollar, Christian said.It's also difficult to rapidly increase the liquidity of a currency without sparking high inflation, he noted."There are a lot of people who are hesitant to trade and hold reserves and wealth and bank accounts in the yuan because it's not a fully free-moving currency. So there are limits to it," he added.<h3 id="0d28cfe1-0ae4-4e05-8624-6442c3c3c16d">2. Limited trade</h3>Second, countries that try to phase out the dollar could be stifling their imports and exports. Again, that's because the dollar is the world's most widely traded currency — and not using that currency could limit a nation's scope of trading partners, which also impacts economic growth, Christian said.<a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-collapse-recession-moscow-ukraine-war-us-dollar-energy-2024-7#:~:text=According%20to%20UC%20Berkeley%20economist,steady%20flow%20of%20US%20dollars.">Russia is one such example</a>. The nation denounced the dollar after it was slapped with Western sanctions in 2022. But forgoing the greenback is only isolating the nation more from international markets, one UC-Berkeley economist told BI, which could be weakening its economy even further.<h3 id="cfcee6a6-0941-44ce-96bf-916adfd6402a">3. Lost value</h3>Third, central banks risk making a "bad investment" by holding other currencies, since the dollar is a superior store of value, Christian said. According to the <a target="_blank" class="" href="https://markets.businessinsider.com/index/us-dollar-index">US dollar index</a>, which weights the greenback against a basket of foreign currencies, the greenback has appreciated around 40% since its trough in 2011. Meanwhile, currencies like the <a target="_blank" class="" href="https://markets.businessinsider.com/currencies/cny-usd">yuan have depreciated against the dollar</a> over the past decade."The dollar has been very strong for the last 20 years. And so, you are making bad investments," Christian said of central banks opting to shed their dollar reserves.Christian also doesn't see "too many" countries in the world de-dollarizing on a wide scale, barring exceptions like Russia, where geopolitical tensions with the US have bled into economic policies.Since the dollar is so widely used in financial markets, he estimates it would take decades for the dollar to be displaced if it ever does happen. That's similar to the view held by other currency experts, who say the <a target="_blank" class="" href="https://markets.businessinsider.com/news/currencies/dedollarization-dollar-dominance-currency-war-greenback-china-yuan-economy-2023-5">dollar's incumbency will take a long time to topple</a> due to its safe-haven reputation."You have these massive impediments to moving toward a less dollar-dependent international currency regime. It's not impossible, but it's either going to take decades to execute or it's going to come at the end of a very enormous global economic and financial collapse that I just don't see happening," Christian said.

De-dollarization is a fad that will backfire on countries trying to move away from the greenback, currency expert says

<ul class="summary-list"><li>Europe could crater into a recession without Russian <keyword id="11955852" type="UNKNOWN" weightage="60" keywordseo="gas" source="Orion">gas</keyword> deliveries, the <keyword id="12030574" type="UNKNOWN" weightage="60" keywordseo="imf" source="Orion">IMF</keyword> warned Tuesday. </li><li>Nations would have to pool scarce supplies and impose price caps to try and avoid major recessions, it added.</li></ul>A full halt in Russian gas supplies to Europe would spark recessions across the continent unless nations banded together to share liquid natural gas resources, the <keyword id="12472836" type="UNKNOWN" weightage="60" keywordseo="international-monetary-fund" source="Orion">International Monetary Fund</keyword> warned Tuesday.In addition to pooling dwindling supplies, avoiding major recessions would also require European nations to impose artificial price caps, <a href="https://blogs.imf.org/2022/07/19/how-a-russian-natural-gas-cutoff-could-weigh-on-europes-economies/">IMF economists said in a blog post</a>. Roughly 42% of European gas imports come from <keyword id="11894337" type="UNKNOWN" weightage="60" keywordseo="russia" source="Orion">Russia</keyword>, and a cutoff would trigger economic contractions of more than 5% over the next year for the Czech Republic, Hungary, Slovakia, and Italy, the IMF said. Under a best-case scenario, the EU's economy would contract by 0.4%, but shrink by more than 2% in a worst-case scenario. Plus, supply chain bottlenecks and hoarding by individual European nations could exacerbate any gas shortage and result in an even worse energy crunch. Russia has already stopped gas flows to Germany via the Nord Stream 1 pipeline during its annual maintenance period, which is supposed to end Thursday. But EU leaders don't expect a restart this week, the <a href="https://affiliate.insider.com?u=https%3A%2F%2Fwww.wsj.com%2Farticles%2Feu-expects-vital-russian-gas-supplies-wont-be-restarted-on-schedule-11658224803%3Fmod%3Dhp_lead_pos6">Wall Street Journal</a> reported. European leaders have blamed Moscow for weaponizing energy supplies since the war in Ukraine started in February. Moscow has denied the accusations.The IMF's warning comes after Managing Director Kristalina Georgieva <a href="https://blogs.imf.org/2022/07/13/facing-a-darkening-economic-outlook-how-the-g20-can-respond/">wrote in a blog post last week</a> that the lender plans to cut its global economic growth forecast for later in July. She cited the ongoing war in Ukraine, 41-year-high inflation and the reverberations from COVID-19 lockdowns in China. "It's going to be a tough 2022 - and even possibly a tougher 2023, with increased risk of recession," she said.

A Russian gas cutoff would send Europe into recession unless nations around the world pooled their dwindling supplies together, IMF says

<ul class="summary-list"><li>The <keyword id="12472836" type="UNKNOWN" weightage="60" keywordseo="international-monetary-fund" source="Orion">International Monetary Fund</keyword> is gearing up to slash growth forecasts again.</li><li>Kristalina Georgieva wrote that "downside risks" have worsened since the last <keyword id="12426621" type="UNKNOWN" weightage="60" keywordseo="g20" source="Orion">G20</keyword> meeting.</li></ul>The International Monetary Fund plans to cut its global economic growth forecast for later in July, managing director Kristalina Georgieva <a href="https://blogs.imf.org/2022/07/13/facing-a-darkening-economic-outlook-how-the-g20-can-respond/">wrote in a blog post Wednesday</a>. She cited previous concerns over "downside risks" that have worsened since the last G20 meeting in April — when the <keyword id="12030574" type="UNKNOWN" weightage="60" keywordseo="imf" source="Orion">IMF</keyword> had already cut its growth forecase to 3.6% — including the ongoing war in <keyword id="11985141" type="UNKNOWN" weightage="60" keywordseo="ukraine" source="Orion">Ukraine</keyword>, 41-year high <keyword id="11894140" type="UNKNOWN" weightage="60" keywordseo="inflation" source="Orion">inflation</keyword> and the reverberations from COVID-19 lockdowns in China as driving the need to lower expectations. "It's going to be a tough 2022 - and even possibly a tougher 2023, with increased risk of recession," she said. Georgieva's comments follow mounting recession calls on Wall Street that have been pushing stocks deeper into a bear market. Some experts expect to see a recession in 2023, while inflation runs at a record-high clip and energy supply chains remain hobbled by the war in Europe. The mixed bag is worrying, Georgieva said, and necessitates "decisive action and strong international cooperation, led by the G20."Georgieva provided an outline to navigating the tumultuous economic picture. She noted three priorities taken from a new surveillance note to the G20 ahead of the group's next meeting. First among them is taming inflation while central banks continue to tighten monetary policy despite the potential for an economic slowdown.Second, she said, is the need for fiscal policy to work in concert with central banks to dampen inflation despite some countries facing significantly higher debt burdens. "Shifting away from extraordinary fiscal support will help tamp down demand and thus reduce price pressures," Georgieva said.Third, she concluded by saying global leaders must work together more closely in the future to help stem economic fallout and "avoid potential crisis and boost growth and productivity."

The IMF is about to slash its global growth forecast for the 2nd time in 3 months as high inflation, China lockdowns, and war in Ukraine hammer economies

Inflation in <keyword id="3658" type="General" weightage="50" keywordseo="india" source="Orion">India</keyword> is expected to come down from 6.8 percent in the current fiscal year ending March 31 to 5 percent the next fiscal, and then drop further to 4 percent in 2024, the <keyword id="6366068" type="General" weightage="50" keywordseo="international-monetary-fund" source="Orion">International Monetary Fund</keyword> (<keyword id="6355408" type="General" weightage="100" keywordseo="imf" source="Orion">IMF</keyword>) said on Tuesday. “Inflation in India as in other countries is expected to come down from 6.8 percent in 2022 to 5 percent in 2023 and then 4 percent coming towards the target in 2024,” <keyword id="15228271" type="General" weightage="50" keywordseo="daniel-leigh" source="Orion">Daniel Leigh</keyword>, <keyword id="16303768" type="General" weightage="20" keywordseo="division-chief" source="Orion">Division Chief,</keyword> <keyword id="976312" type="General" weightage="50" keywordseo="research-department" source="Orion">Research Department</keyword> of the IMF told reporters here. “That partly reflects the central bank's actions,” he added, According to the <keyword id="188983" type="General" weightage="20" keywordseo="world-economic-outlook" source="Orion">World Economic Outlook</keyword> update released by the IMF on Tuesday, about 84 percent of countries are expected to have lower headline (consumer price index) inflation in 2023 than in 2022. Global inflation is set to fall from 8.8 percent in 2022 (annual average) to 6.6 percent in 2023 and 4.3 percent in 2024 -- above pre-pandemic (2017–19) levels of about 3.5 percent, it said. The projected disinflation partly reflects declining international fuel and non-fuel commodity prices due to weaker global demand. It also reflects the cooling effects of monetary policy tightening on underlying (core) inflation, which globally is expected to decline from 6.9 percent in the fourth quarter of 2022 (year over year) to 4.5 percent by the fourth quarter of 2023, the IMF said. “Still, disinflation will take time: by 2024, projected annual average headline and core inflation will, respectively, still be above pre-pandemic levels in 82 percent and 86 percent of economies,” it said. In advanced economies, annual average inflation is projected to decline from 7.3 percent in 2022 to 4.6 percent in 2023 and 2.6 percent in 2024 -- above target in several cases. In emerging markets and developing economies, projected annual inflation declines from 9.9 percent in 2022 to 8.1 percent in 2023 and 5.5 percent in 2024, above the 4.9 percent pre-pandemic (2017–19) average, the IMF said. In low-income developing countries, inflation is projected to moderate from 14.2 percent in 2022 to 8.6 percent in 2024 -- still high, but close to the pre-pandemic average, it further said. In a blog post, <keyword id="12346475" type="General" weightage="20" keywordseo="pierre-olivier-gourinchas" source="Orion">Pierre-Olivier Gourinchas</keyword>, Chief Economist and Director, Research Department of the IMF, wrote that global inflation is expected to decline this year but even by 2024, projected average annual headline and core inflation will still be above pre-pandemic levels in more than 80 percent of countries. “The inflation news is encouraging, but the battle is far from won. Monetary policy has started to bite, with a slowdown in new home construction in many countries. Yet, inflation-adjusted interest rates remain low or even negative in the euro area and other economies, and there is significant uncertainty about both the speed and effectiveness of monetary tightening in many countries,” Gourinchas said.

Inflation in India expected to come down to 5 pc in 2023 and 4 pc in 2024: IMF

<keyword id="22195" type="General" weightage="20" keywordseo="Inflation" source="Orion">Inflation</keyword> is likely to have reached its peak in 2022 but there is no end in sight for the <keyword id="533011" type="General" weightage="20" keywordseo="cost-of-living" source="Orion">cost of living</keyword> crisis, experts said on Tuesday. Speaking at a panel discussion during the World Economic Forum Annual Meeting 2023, they said those on low income and in the developing world will be grappling with high prices for years to come. <keyword id="154034" type="General" weightage="50" keywordseo="gita-gopinath" source="Orion">Gita Gopinath</keyword>, Deputy Managing Director of the <keyword id="6366068" type="General" weightage="80" keywordseo="international-monetary-fund" source="Orion">International Monetary Fund</keyword>, said, "we do believe that, in terms of headline inflation for the global economy, we think it peaked in 2022." Participants agreed that inflation is inextricably linked to the cost of living crisis and tackling inflation is key to easing the cost crunch in the long run. However, <keyword id="60820" type="General" weightage="80" keywordseo="gopinath" source="Orion">Gopinath</keyword> warned, "even if inflation comes down, prices are high because we don't have deflation, we have lower levels of inflation. The prices have gone up. How much of an impact that has had on households and on consumption varies across countries." German Finance Minister <keyword id="1084060" type="General" weightage="50" keywordseo="christian-lindner" source="Orion">Christian Lindner</keyword> highlighted his country's 200 billion euro "economic shield" mobilised to protect consumers from the cost of living crisis but said that he expects the country might not need the full amount. "The price levels are lower than we expected. We have fewer hardship cases, and so my expectation is that we won't need the whole protective shield of two hundred billion, which is good news," he said. According to him, on top of protecting the society's most vulnerable, the sections in the middle also need shielding from the cost of living crisis. "From the German, European, perspective, we are doing a lot for the most vulnerable, paying welfare subsidies. But we have to ask: what can we do to stabilise the qualified people who are working hard, playing by the rules?". "A renaissance of competitiveness, so that our companies are able to pay their wages... we have to reform the electricity market, we have to reduce the burdens, for example, in taxation, we have to improve the framework conditions for our SMEs (Small and Medium-sized Enterprises) in Germany and all of these supply-side measures," the minister said. The panel also agreed that the knee-jerk reaction of the "re-shoring" industry in response to the supply chain shock of the COVID pandemic must be averted if inflation and the cost of living crisis are to be tackled effectively. Giving the perspective from business, Unilever CEO Alan Jope said the "fragmentation of supply chains is frankly another inflationary pressure in this economy" and warned more generally of the dangers of inequality. "The cost-of-living crisis disproportionately impacts those at the bottom of the pyramid. There is so much talk about tightening rates, and about stimulus spending, I think the only way to break the long-term trend of rising inequality is productivity," he added. He explained that Unilever has increased the wages it pays to its own workers, imploring others to do the same. Laura D'Andrea Tyson, Professor of Economics at the University of California, Berkeley, also highlighted the fundamental issue of wages. "I almost want to say, without calling it a cost of living crisis, let's call it what existed before, and that is a living wage crisis for many people." She also suggested tackling long-standing issues around planning and approvals for housing -- in order to build more stock and bring down prices -- and addressing the climate crisis and utilising technology would aid the global response to inflation. In closing, IMF's Gopinath cautioned that any meaningful moves to bring down inflation will likely mean rising unemployment. "We are at record low unemployment rates in the US and the euro area. Everything we know about our monetary policy when you tighten interest rates is for the unemployment rate to go up." "That is how you bring down inflation," she added. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/sebi-slaps-final-hearing-notices-to-9-missing-entities/articleshow/97171426.cms">SEBI slaps final hearing notices to 9 'missing' entities</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/jsw-steel-q3-net-profit-falls-over-85-to-474-crore/articleshow/97174189.cms">JSW Steel Q3 net profit falls over 85 % to ₹474 crore</a>

Inflation may be past peak but cost of living crisis is far from over, say experts

Asking the world to be pragmatic and collaborate, <keyword id="6355408" type="General" weightage="100" keywordseo="imf" source="Orion">IMF</keyword> chief <keyword id="2200950" type="General" weightage="50" keywordseo="kristalina-georgieva" source="Orion">Kristalina Georgieva</keyword> on Friday said fragmentation can cost up to 7 per cent of the global GDP. "If we don't unite now, we'll face significant risk to the economy and people's wellbeing," she said during a session on the global economy on the last day of the World Economic Forum Annual Meeting 2023. The <keyword id="6366068" type="General" weightage="50" keywordseo="international-monetary-fund" source="Orion">International Monetary Fund</keyword> Managing Director said if we look at medium-term growth prospects, and how we handle the supply chain issues, that will decide our future prospects. She said her message to the world is to "be pragmatic and collaborate". Asked what will take for the IMF to upgrade its global growth forecast, she said, "Last year, we downgraded the growth projections three times and not downgrading further itself is good news at the moment." Also, the labour market needs to be looked at seriously, as for anyone, having a cost of living crisis and a job is much better than having no cost of living crisis and no job, she said. "2022 was a weird year. There was no growth engine. But some things must be improving now or at least it has not been as bad as feared," ECB President and former IMF chief <keyword id="126443" type="General" weightage="50" keywordseo="christine-lagarde" source="Orion">Christine Lagarde</keyword> said. <keyword id="1334" type="General" weightage="20" keywordseo="china" source="Orion">China</keyword> is now emerging again and that would be positive for the rest of the world also, though that may lead to some inflationary pressures, she added. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/sebi-slaps-final-hearing-notices-to-9-missing-entities/articleshow/97171426.cms">SEBI slaps final hearing notices to 9 'missing' entities</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/jsw-steel-q3-net-profit-falls-over-85-to-474-crore/articleshow/97174189.cms">JSW Steel Q3 net profit falls over 85 % to ₹474 crore</a>

Fragmentation can cost 7% of the global GDP, will face risk if we don't unite now: IMF chief

<ul class="summary-list"><li>The <keyword id="12030574" type="UNKNOWN" weightage="60" keywordseo="imf" source="Orion">IMF</keyword> on Tuesday cut its global growth projection for 2022 largely due to the Russia-Ukraine war. </li><li>It now expects growth of 3.6%, lower than its previous outlook of 4.4%. </li></ul>The <keyword id="12472836" type="UNKNOWN" weightage="60" keywordseo="international-monetary-fund" source="Orion">International Monetary Fund</keyword> on Tuesday projected a sharp slowdown in 2022 economic growth worldwide as <keyword id="11894337" type="UNKNOWN" weightage="60" keywordseo="russia" source="Orion">Russia</keyword>'s war against <keyword id="11985141" type="UNKNOWN" weightage="60" keywordseo="ukraine" source="Orion">Ukraine</keyword> drives up energy prices and hurts the recovery from the COVID pandemic. The IMF now sees global growth at 3.6% this year, a cut from its 4.4% forecast issued in January and slower than the expansion of 6.1% in 2021. Beyond 2023, it expects global growth to decline to about 3.3% over the medium term. "The war in Ukraine has triggered a costly humanitarian crisis that demands a peaceful resolution," the IMF said in its <a href="https://www.imf.org/en/Publications/WEO/Issues/2022/04/19/world-economic-outlook-april-2022">World Economic Outlook</a> published after Russia invaded Ukraine on February 24. The deadly conflict was contributing to already high inflation, it said. "Fuel and food prices have increased rapidly, hitting vulnerable populations in low-income countries hardest." Commodity prices driven up by the war and broadening price pressures prompted the financial institution to lift its inflation projections. It sees inflation hitting 8.7% in emerging market and developing economies, and 5.7% in advanced economies. The previous outlooks had been 5.9% and 3.9%, respectively. <a href="https://markets.businessinsider.com/commodities/oil-price">Brent crude</a> and <a href="https://markets.businessinsider.com/commodities/oil-price?type=wti?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingest">West Texas Intermediate crude oil</a> prices have shot up by close to 40% this year on supply shortage and embargo concerns involving Russia, a major oil producer. In the US, the surge in oil prices has pushed the national average for gas prices well past $4 a gallon. Leaping gas prices contributed to <a href="https://www.businessinsider.com/inflation-cpi-march-price-growth-report-gas-food-costs-climbing-2022-4">March headline inflation accelerating 8.5%</a>, marking the fastest increase since December 1981. The war is set to lead to contractions in both the Ukrainian and Russian economies in 2022.The IMF projected Ukraine's gross domestic product will shrink by 35% but said it's "impossible to obtain" precise measures of the damage from the war. "And even if the war were to end soon, the loss of life, destruction of physical capital, and flight of citizens will severely impede economic activity for many years to come," said the Washington, DC-based group. Ukraine's <keyword id="11893570" type="UNKNOWN" weightage="60" keywordseo="economy" source="Orion">economy</keyword> grew 3.4% in 2021. It sees Russia's economy shrinking 8.5% in 2022, with a further decline of 2.3% in 2023. "The withdrawal of foreign firms has hobbled many industries, including aviation, finance, software, and agriculture. As a result, the outlook remains bleak," it said.

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