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IMF Chief Economist Gita Gopinath



The IMF’s latest forecast calls for inflation to return to pre-pandemic levels by the middle of 2022

IMF chief economist Gita Gopinath told AFP on Tuesday that while rising energy prices are having an impact on households, the recent spike is unlikely to fuel the oil crisis of the 1970s and lag behind early next year. Should go away. Energy prices fell last year amid shutdowns imposed to contain the COVID-19 pandemic, but there was a sharp jump in demand in 2021, Ms. Gopinath said.

In the energy market, a particularly hot summer after a long, cold winter led to higher demand and depleted stocks, especially gas reserves in Europe.

“This recovery is really quite unique,” he said on the sidelines of the annual meetings of the International Monetary Fund and the World Bank.

Supply of many other goods has not been able to rebound as quickly as demand, partially hampered by the spread of the delta version of COVID-19, which has made workers reluctant to return to their jobs and disrupted supply chains. have make.

He said labor shortages in countries such as Germany, the United States and Japan are “feeding under price pressure”.

“We are in a difficult situation where we have seen prices go up very rapidly,” and the important question is whether this will continue, she said.

Worst case?

While energy prices will “advance” for the next few months, “we expect that to return by the end of the first quarter next year and back in the second quarter,” she said.

“Once we get past the winter months, we’ll be in a better place.”

Oil prices have risen in recent weeks, hitting multi-year highs on Monday, with benchmark WTI crude above $80 a barrel for the first time since October 2014 and up 30 percent since August , leading to a fall in the major stock markets.

The rise in energy prices has raised fears that overall inflation could remain even higher and hinder global economic recovery.

Ms Gopinath cautioned that the weather would play a factor, as a very severe winter could cause widespread power cuts “which would have a huge impact on the world.”

He said the worst outcome would be ‘an extremely severe winter in the Northern Hemisphere’, spurring energy demand, combined with the failure of producers including OPEC+ to respond with increased production, which could feed into headline inflation, he said.

In February 2021, polar temperatures and severe weather marked by blizzards increased electricity consumption in the southern United States.

Texas, with a population of about 29 million, was unable to meet the explosion in demand, and the blackout affected hundreds of thousands of homes.

However, Ms. Gopinath does not expect the kind of crisis seen in the 1970s as the world relies little on energy relative to the size of the economy.

Referring to the economic crisis in the 1970s, he said, “Gas prices would increase greatly, for example, a sort of stagflation event.”

The latest IMF forecast calls for inflation to return to pre-pandemic levels by mid-2022, but warns of “high uncertainty” and upside risks in the United States.


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