ISLAMABAD: International Monetary Fund (IMF) chief Kristalina Georgieva on Thursday warned that countries have yet to see the full impact of tightening economic conditions.
Global growth is likely to slow further this year, as the US Federal Reserve and other central banks have raised interest rates to control increasing prices.
While some sectors like housing have been reeling in the US, the labor market remains strong with low levels of unemployment.
IMF chief said that as long as people are on jobs, even if the inflation rate is high, consumers spend money, but the financial conditions are yet to be tightened and people could face unemployment.
She said that inflation is still stubborn and the job of central banks is not yet done.
This means that central banks may require to continue increasing interest rates, walking a fine line between slowing demand and avoiding plunging economies into recession, and it is a risky practice.
She stressed the need to watch how tough economic conditions hit the labor market and likely translate into more tensions between employers and workers.
IMF chief warns of shrinking policy space
IMF chief said that governments are quick in their policies and adding a buffer between consumers and increasing energy and food prices, but this policy space is also shrinking.
Georgieva further said that the tightening financial conditions will dramatically affect countries with high debt levels, however IMF does not see ant systematic debt crisis on the horizon. –AFP/APP
