Emerging economies ‘must prepare for Fed tightening and rising threats to global recovery’ – The National

Emerging economies ‘must prepare for Fed tightening and rising threats to global recovery’ – The National

The resurgent pandemic and faster US Federal Reserve tightening pose risks to global recovery and emerging economies should prepare for bouts of economic turbulence, according to the International Monetary Fund.

As well as the rampant Omicron variant, supply-side pressures and the Fed’s decision to accelerate the tapering of asset purchases, emerging markets are confronting elevated inflation and substantially higher public debt, the Washington-based lender said in a blog post on Monday.

“Average gross government debt in emerging markets is up by almost 10 percentage points since 2019 reaching an estimated 64 per cent of gross domestic product by the end of 2021, with large variations across countries,” said Stephan Danninger, who co-wrote the blog and is division chief of macro policies in the IMF’s strategy, policy and review department.