![\"\"](\"http:\/\/www.ghanamma.com\/wp-content\/uploads\/2022\/07\/IMF-696x392.jpg\" "\\"IMF")
The head of the International Monetary Fund has said it will downgrade its expectations for global economic growth this month.<\/p>\n
Its most recent forecast, issued in April, was for\u00a03.6% growth this year\u00a0and next.<\/p>\n
Kristalina Georgieva said the war in Ukraine, higher than expected inflation, and the ongoing Covid pandemic are to blame.<\/p>\n
These are making the cost of living crisis worse for millions, she said.<\/p>\n
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And the poorest are suffering the most, she added.<\/p>\n
It comes as inflation in the US \u2013 world\u2019s biggest economy \u2013\u00a0reached 9.1%, the highest in more than 40 years.<\/p>\n
Her warning that the global economic outlook \u201chas darkened significantly\u201d comes as G20 finance ministers and central bank governors prepare to meet in Bali.<\/p>\n
Their agenda is full of issues that are troubling the global economy, including rising commodity prices,\u00a0food security,\u00a0and the impact of the war in Ukraine given it was a major food exporter.<\/p>\n
Indonesia\u2019s central bank governor Perry Warjiyo is cautious about the prospect of reaching an agreement over the way forward, saying: \u201cWe hope for the best, but of course prepare for the worst\u201d.<\/p>\n
Ms Georgieva\u00a0said in a blog post\u00a0that inflation has \u201cbroadened beyond food and energy prices\u201d in that has led many central banks to increase the cost of borrowing, something she said will \u201cneed to continue\u201d.<\/p>\n
Canada became the latest major central bank to increase interest rates, raising its main rate from 1.5% to 2.5% as it tries to tackle inflation that has risen to 7.7%.<\/p>\n
The bank\u2019s governor Tiff Macklem said the higher than expected increase, the biggest in 24 years, \u201creflects concern that inflation is too high and it\u2019s affecting all Canadians\u201d.<\/p>\n
The US Federal Reserve is increasingly seen as likely to make a similarly big increase when it meets later this month. It\u2019s already made\u00a0three increases this year.<\/p>\n
Higher interest rates are typically used to reduce inflation because they mean companies and individuals need to use more cash to repay loans, rather than spending it on goods and services.<\/p>\n
The IMF says 75 central banks have raised interest rates in the last year, on average, 3.8 times.<\/p>\n
But if that pattern doesn\u2019t continue Ms Georgieva anticipates \u201ceven more harm to growth and employment\u201d, adding: \u201cActing now will hurt less than acting later.\u201d<\/p>\n
There is also a warning that countries which have pumped in billions of dollars to support their economies through the pandemic need to reduce that to dampen the demand for goods and services that is being fuelled by that money.<\/p>\n
However, cash handouts \u201cto support vulnerable households\u201d, are still needed, especially those who are suffering most from high energy or food prices, she said.<\/p>\n
Ms Georgieva said this spending must be funded by cuts elsewhere or new sources of income, other than debt.<\/p>\n
In the longer term, policies that tackle the global shortage of labour, especially those that encourage more women to work, will help too, she adds.<\/p>\n
With preparations underway for this weekend\u2019s G20 meeting, Ms Georgieva says that better global cooperation is needed because \u201crisks of social instability are rising\u201d thanks to concerns over food and energy supplies.<\/p>\n
Such concerns have contributed to the\u00a0widespread protests in Sri Lanka, which is suffering it\u2019s worst economic crisis since independence more than 70 years ago.<\/p>\n
The head of the IMF said immediate actions that can be taken include the ending of restrictions on food exports that many countries have imposed since the war in Ukraine started.<\/p>\n
She also called for the world\u2019s richest countries to use the meeting as a chance to help \u201cprovide urgent support\u201d to those most in need.<\/p>\n
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