Are there brighter prospects than at the last IMF meetings? Only just
As a spectacle, this week’s half-yearly gathering of the world’s finance minsters and central bank governors in Washington will be hard-pressed to come up to the standards of the last occasion they met, in October 2022.
Inflation was soaring, there were fears that the squeeze on businesses and consumers would plunge the world into recession and war was raging in Ukraine. Yet it was the UK that was the talk of the annual meetings of the International Monetary Fund and the World Bank – and for all the wrong reasons.
Being forced to explain the thinking behind his badly received mini-budget was a chastening experience for then chancellor Kwasi Kwarteng. He received a public dressing down from his US counterpart, Janet Yellen, and then, just when it seemed things could not get any worse, they did. Kwarteng was instructed by Liz Truss to fly home early and was sacked the following day.
Many of the global problems identified by the IMF and the World Bank six months ago will feature again this week. Inflation has come down a little, but is still too high for comfort as far as central banks in the US, the eurozone and the UK are concerned. Growth is a little stronger than had been expected last October, but not significantly so. And with interest rates still rising, the risk of a hard landing in the west has by no means gone away. The IMF’s managing director, Kristalina Georgieva, was certainly not getting carried away when she delivered her curtain-raising speech in Washington last Thursday.
Nor will Kwarteng’s successor, Jeremy Hunt, be taking anything for granted. Last October, the IMF’s flagship publication, its World Economic Outlook (WEO), predicted that the UK would grow by 0.3% this year. By late January, when the IMF
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