An IMF blog by Kristalina Georgieva listing how the G20 can respond to a darkening economic outlook was an interesting read. Here is a shortened version.
When the G20 last met in April, the IMF had just cut its global growth forecast to 3.6% for this year and next. Since then, several predicted risks have materialized, and the multiple crises facing the world have intensified.
The human tragedy of the war in Ukraine has worsened along with its economic effect, especially through commodity price shocks that are slowing growth and exacerbating a cost-of-living crisis that affects hundreds of millions.
Inflation is higher than expected, broadening beyond food and energy prices and prompting major central banks to announce further monetary tightening, which is necessary but will weigh on the recovery. Continuing pandemic-related disruptions—especially in China—and renewed bottlenecks in global supply chains have hampered economic activity.
All that implies a weak second quarter, and we will be projecting a further downgrade to global growth for 2022 and 2023 in our World Economic Outlook Update later this month. For now, the outlook remains extremely uncertain.
Let me highlight three priorities.
Countries must do everything in their power to bring down inflation.
Persistent, high inflation could sink the recovery and further damage living standards, particularly for the vulnerable. Inflation has already reached multi-decade highs in many countries, with headline and core inflation continuing to rise.
This has triggered a monetary tightening cycle that is increasingly synchronized: 75 central banks—or about three-quarters of the central banks we track—have raised interest rates since July 2021. And, on average, they have done so 3.8 times. For emerging and developing economies, where policy rates were lifted sooner, the average total rate increase has been 3 percentage points—almost double the 1.7 percentage points for advanced economies.
Fiscal policy must help—not hinder—central bank efforts to reduce inflation.
Countries facing elevated debt levels also will need to tighten fiscal policies. This will help reduce the burden of increasingly expensive borrowing and simultaneously complement monetary efforts to tame inflation.
In countries where recovery from the pandemic is more advanced, shifting away from extraordinary fiscal support toward more targeted support will help tamp down demand and thus reduce price pressures.
We need a fresh impetus for global cooperation led by the G20.
To avoid potential crises and boost growth and productivity, more coordinated international action is needed. The key is to build on recent progress in areas ranging from taxation and trade to pandemic preparedness and climate change. The G20’s new $1.1 billion fund for pandemic prevention and preparedness shows what is possible, as do recent successes at the World Trade Organization.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $137.00 to $149.83 per cwt, compared with last week’s range of $138.00 to $148.92. FOB dressed steers, and heifers went for $217.59 to $221.85 per cwt, versus $217.96 to $226.88.
The USDA choice cutout Thursday was down $0.30 per cwt at $267.75, while select was up $0.65 at $241.91. The choice/select spread narrowed to $25.84 from $26.79 with 91 loads of fabricated product and 19 loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were steady at $2.75 to $2.85 a bushel over the Sep futures and for southwest Kansas were steady at $0.10 under Sep, which settled at $6.05, up $0.05.
The CME Feeder Cattle Index for the seven days ended Wednesday was $174.05 per cwt up $1.75. This compares with Thursday’s Aug contract settlement of $178.90, down $1.90.