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Finance chiefs to address slowdown concerns with IMF

The slowing world economy will take centre stage when finance ministers and central bank heads meet in Washington this week.

The annual meetings of the International Monetary Fund (IMF) and World Bank began with the new head of both organisations expressing concern over the outlook.

International Monetary Fund Managing Director Kristalina Georgieva (Photo: Unian)

IMF Managing Director Kristalina Georgieva has already indicated her economists will cut their projections for global growth from 3.2 per cent this year and 3.5 per cent next year.

That will be the fourth downgrade since last October and reflects what Georgieva last week called a “synchronised slowdown” in which 90 per cent of the world is experiencing weakening demand.

The question for central bankers and finance ministers is what can they do to prop up their economies.

US President Donald Trump at the White House. (Photo: National Review)

A lot will depend on the result of trade talks between the US and China, which ended on Friday in a partial agreement. That doesn’t mean, however, that a curtain is being drawn on the uncertainty President Donald Trump’s trade wars have brought to the global economy.

Here’s what happened last week and a look at what’s going on in the world economy this week:

USA

Chairman of the Federal Reserves Jerome Powell speaking in a panel discussion at the University of Zurich. (Photo: USA Today)

Federal Reserve Chair Jerome Powell is not scheduled to appear in public this week, so investors will have to wait for any signs from the very top of the central banks as to whether it will cut interest rates this month for the third time this year. Several regional Fed presidents are expected to take to the microphone.

Atlanta’s Raphael Bostic, Kansas City’s Esther George, James Bullard of St Louis and Mary Daly of San Francisco all talk Tuesday. Chicago’s Charlie Evans and John Williams of New York follow Wednesday. Robert Kaplan of Dallas, Vice Chairman Rich Clarida and Neel Kashkari of Minneapolis speak Friday.

The Fed’s Beige Book comes out on Wednesday giving a snapshot of economic conditions across the nation. That is published hours after retail sales data for September with economists predicting another month of modest growth.

Industrial production may have contracted the same month, underscoring recession fears, a report is forecast to show on Thursday.

Europe, Middle East and Africa

Industrial production for the Eurozone will be released on Monday, giving another indication of how the German slowdown has marred overall growth. Meanwhile, multiple European Central Bank officials may use the IMF meetings to extend the recent spat over stimulus.

“…[E]conomists will cut their projections for global growth from 3.2 per cent this year and 3.5 per cent next year…”

— IMF Managing Director Kristalina Georgieva

In the UK, labour market, inflation, and retail sales data will illustrate the economic backdrop during a crunch political week as another Brexit deadline looms and an extension or deal remains clouded in doubt.

Israel’s inflation on Tuesday is likely to stay below the central bank’s target range of one per cent to three per cent, showing why a rate cut to near zero is in the cards. A financial crisis may be looming in Lebanon as pressure on the currency peg mounts and investors increasingly ask how long the government can continue to repay its debts.

In Ghana, September inflation data will be out on Wednesday.

Latin America

Argentina’s Government will start publishing a final round of key economic indicators before the October 27 presidential election. September consumer price figures are due on Wednesday, and economists surveyed by the central bank expect a month-on-month jump of 5.8 per cent, which would be the biggest in a year.

A delegation of Argentine officials will head to Washington for the IMF meetings. Tensions have risen between them and the lender since they signed a record US$56 billion credit deal in 2018.

Asia

Central banks in two bellwether trade economies — Singapore and South Korea —will announce monetary policy decisions this week, with both likely to ease as growth outlooks worsen. Singapore output data on Monday will likely show the economy narrowly missed a recession, enabling central bankers to take a gradual approach to policy easing.

Hong Kong Chief Executive Carrie Lam speaking at a meeting of the city’s executive council. (Photo: Yahoo! News)

A raft of data out of China will likely show an economy that’s hurting: GDP growth probably slowed further in the third quarter, exports continued to contract and producer prices are deflating again. In Hong Kong, Chief Executive Carrie Lam will set out her economic policy objectives in a key speech, coming against the backdrop of a worsening political crisis and deepening economic slump.