IMF warns rates, conflict and climate top emerging markets risks
International Monetary Fund warned that emerging markets must grapple with post-pandemic risks from tougher global financial conditions, the fragmentation of world trade into rival blocs and the impact of climate change.
Those forces are “transforming the economic landscape and making the world more volatile and uncertain,” Gita Gopinath, the fund’s No. 2 official, said at a central banking conference in Cape Town, South Africa on Friday.
Addressing those interconnected challenges will require an array of tools, she said, including more efficiently raising revenue and spending, diversifying trade, accelerating reforms to attract more investment, and implementing fiscally and socially sustainable climate strategies.
Global interest rates could remain high “for quite some time” amid the fight against inflation, she said, adding that average long-term yields on emerging market dollar bonds have risen about 200 basis points — meaning their borrowing costs are higher — since the Federal Reserve began tightening policy.
