Soaring inflation leads emerging markets into stagflation, IIF report says
Collected Image
In a separate report released on Wednesday, the IMF said countries face tough choices when dealing with rising inflation, the lingering pandemic and historically high levels of debt.
The sharp rise in oil and gas prices is stoking inflation and crimping growth. Russia is a major supplier of oil, gas and metals, and, together with Ukraine, of wheat and corn. A supply crunch of these commodities has already driven prices up sharply.
Exchange rate pass-through, a traditional source of inflationary pressure in EMs, is not the main culprit behind soaring inflation, the IIF said. “When we net out the impact of recent depreciation from core inflation, we still get very elevated figures,” it said.
Read More : Lebanon's $3bn deal with IMF expected to fuel 'reform momentum' but difficulties persist
But the Washington-based agency also found two countries going through “classic” overheating – Chile and Colombia, which display both strong activity and high inflation. Unlike most EMs, they are “classic overheating cases due to prolonged expansionary policies. Chile has a better chance than Colombia at cooling in the second half of this year due to sharp policy tightening”.The world’s most populous country, China, is an “odd outlier”, the authors said. “Core inflation momentum is very weak [in China] although it is not easy to argue there is a lot of spare capacity in the economy. In the fourth quarter of 2021, [the] real GDP was at a level consistent with 5 per cent growth in 2020-21, a reasonable trend growth rate in a hypothetical no-Covid scenario,” they said.
Source: https://www.thenationalnews.com
Tags :
Previous Story
- Why surging inflation could hamper India’s economic recovery
- Aluminium users cite weak operating conditions in Q1...
- Turkey's inflation set to hit new 20-year high,...
- Powell says ‘inflation is much too high’ and...
- Yellen says substantial inflation slowdown expected next year
- Inflation rises 7% over the past year, highest...
- Energy crisis: UK government set to help consumers...
- Fed officials now seeing U.S. job market near...