The IMF and the G20 are concerned about supply chain bottlenecks and inflation fears.
Global finance leaders gathered in Washington on Wednesday with the goal of resolving supply chain bottlenecks that are driving up prices and jeopardizing the economy’s recovery.
Suppliers have been unable to keep up with demand: ships are lining up outside American ports waiting to offload goods, US consumer inflation remained elevated in September, global oil prices have risen to over $80 a barrel, the highest in years, and British families may be forced to forego turkeys for Christmas dinner.
The White House launched an initiative on Wednesday to advocate for 24-hour operations at major ports to help reduce the backlog, while also asking people not to be alarmed.
The IMF, the Group of 20 major nations, and the smaller conference of finance ministers from the Group of Seven will all be discussing global supply concerns.
Trade lines were closed due to pandemic restrictions, and suppliers were unable to keep up with the rapid rise in demand as economies reopened, slowing the recovery.
The world economy is facing a “very tough phase,” according to IMF chief Kristalina Georgieva, as it emerges from the Covid-19 pandemic.
She did caution, however, that the gap in pandemic immunization rates in developing countries compared to advanced economies is adding to supply problems.
“We should be concerned about this difference in economic fortunes,” she told reporters, “because the possibility of disruptions in global supply chains would increase, and hence the pressure on prices, and so the pressure on inflation will increase.”
The danger is that rising prices start off a vicious cycle, requiring rich economies to hike interest rates to keep inflation under control, raising borrowing costs for developing countries and delaying their recovery.
Georgieva stated that policymakers are confronted with “the most challenging tradeoffs in decades.”
While the International Monetary Fund expects inflation in industrialized nations to decline by the middle of next year, “this imbalance between expanding demand and supply falling behind of course increases pricing pressure,” she said.
President of the World Bank David Malpass warned that certain price increases “would not be ephemeral.”
He believes that 8.5 percent of worldwide container shipping is halted in or around ports, which is twice as much as in January, according to the Washington-based development lender.
Shutdowns at factories and ports have disrupted supplies, resulting in dramatic hikes in shipping fees and the final cost of goods, he told reporters.
“It’ll take some time. The Washington Newsday Brief News is a daily newspaper published in Washington, D.C.