Why Countries Must Cooperate on Carbon Prices
(IMF PHOTOS)
As Russia’s war in Ukraine takes a rising toll on Europe’s economies, growth is flagging across the continent, while inflation shows little sign of abating.
Europe’s advanced economies will grow by just 0.6 percent next year, while emerging economies (excluding Türkiye and conflict countries Belarus, Russia, Ukraine) will expand by 1.7 percent, according to projections in the IMF’s latest World Economic Outlook.
In a new blog, the director of the IMF’s European Department says authorities must tighten macroeconomic policies to bring down inflation, while helping vulnerable households and viable businesses cope with the energy crisis.
“Strength, coordination and solidarity pulled Europe out of the COVID-19 crisis,” Alfred Kammer says.
“Once again, the task ahead is immense, but if European policymakers muster the spirit of the pandemic response, it can be accomplished.”
đź“ş Watch a video of IMF Managing Director Kristalina Georgieva speaking at the European Commission on how markets can be made to work for people.
Â
Most Urgent Challenges
(ASIA IMAGES GROUP; MD JAWADUR RAHMAN/PEXELS; TRAVEL COFFEE BOOK; SAMXMEG/GETTY IMAGES)
Geopolitical tensions have raised the prospect that strategic competition and national security concerns may trump the shared economic benefits of global trade.
Interdependencies between economies mean that such a prospect would be very costly, especially for Asia. About half of the imports in the United States and a third in Europe come from Asia. And, in turn, Asian countries account for almost half of global demand for key commodities.
Policymakers must act decisively to avoid the harm from fraying ties, and ensure trade remains an engine of growth, the IMF Asia and Pacific Department’s Diego A. Cerdeiro, Siddharth Kothari and Chris Redl write in a new blog.
“Rolling back damaging trade restrictions and reducing uncertainty via clear communication of policy objectives should be a priority,” the authors say.
“Above all…engagement and dialogue between countries will be vital to avoid the most harmful fragmentation scenarios.”
Read more about worrying early signs of fragmentation and their consequences in our Asia regional outlook.
Â
Â
The energy crisis should drive—not derail—the transition to clean energy, says Samantha Gross, the director of the Brookings Institute's Energy Security and Climate Initiative, in an interview with the IMF’s Marjorie Henriquez.
The interview, part of Finance and Development Magazine’s Café Economics series, examines how the crisis started, the implications for developing economies, and the risks of a fragmented energy market.
“If we create an energy system that is based on renewables and other forms of zero-carbon electricity, we create a system that is by nature more local and less involved in geopolitics,” Gross says.
Â
The latest edition of F&D Magazine (September 2022) focused on Cryptocurrencies, Central Bank Digital Currencies, and the future of finance.
Other topics included inflation, the food crisis, the economics of fertility, and much more. Authors included Eswar Prasad, Augustin Carstens, Ravi Menon, Tobias Adrian, Fabian Schar, Aditya Narain, Carlo Pizzinelli, Michele Tertilt and many more.
|
