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REUTERS NEXT-Omicron variant likely to usher growth downgrades -IMF's Georgieva

Fri, 03rd Dec 2021 22:02

(Adds details, quotes)

By Andrea Shalal

WASHINGTON, Dec 3 (Reuters) - Global economic growth
projections from the International Monetary Fund will likely be
downgraded due to the emergence of the Omicron variant of the
coronavirus, IMF Managing Director Kristalina Georgieva said on
Friday.

"A new variant that may spread very rapidly can dent
confidence, and in that sense, we are likely to see some
downgrades of our October projections for global growth,"
Georgieva said during the Reuters Next conference.

The IMF said in October it expected the global economy to
grow 5.9% this year and 4.9% next year, pointing then to the
threat of new coronavirus variants as increasing uncertainty
about the timeline for overcoming the pandemic.

INFLATION BITES

Georgieva said high inflation in the United States should be
addressed by policymakers but that such hefty price pressures
are not being observed equally around the world, allowing other
economies to change policy at their own pace.

The IMF's head added that the strength of the U.S. economy
has a positive spillover effect around the world even if it
means the U.S. Federal Reserve will wind down its accommodative
policy stance in the months ahead, as most economists now
expect.

"We do believe that the path to policy rate increases may be
walked faster," she said, pointing to 2022 as a likely target.

Georgieva said tariff reductions are a "useful tool" to help
control inflation and that she was encouraged by U.S. Trade
Representative Katherine Tai's work on tariff reductions through
an exclusion process.

"It is not a silver bullet. There has to be action on all
these fronts, so we can see the issue of inflation being
contained."

Georgieva called for more aggressive debt restructuring for
the current debt burden in developing countries not to become a
long-term headwind.

"The reality is that 2022 is going to be a very pressing
year in terms of dealing with debt," she said, adding that
sovereign debt has risen 18% during the COVID pandemic and it
will take decades to go to pre-pandemic levels unless there is a
"much more thoughtful and aggressive" policy.

"So far, interest rates are relatively low, this is not so
dramatic. Going forward ... that may not be the case."

To watch the Reuters?Next conference please register here https://reutersevents.com/events/next/
(Reporting by Andrea Shalal, aditional reporting by David
Lawder, Daniel Burns and Rodrigo Campos; Editing by Sonya
Hepinstall and Cynthia Osterman)

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