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IMF head shows hopes for Japan’s G-7 leadership

International Monetary Fund Managing Director Kristalina Georgieva
International Monetary Fund Managing Director Kristalina Georgieva
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08 Apr 2023 04:04:33 GMT9
08 Apr 2023 04:04:33 GMT9

WASHINGTON: International Monetary Fund Managing Director Kristalina Georgieva has expressed hopes for leadership from Japan, as this year’s Group of Seven president, on balancing economic security and growth.

In an interview with Jiji Press on Thursday, Georgieva showed concern about the advance of so-called decoupling of Chinese and Western economies, saying that such a development would negatively affect global economic growth.

Georgieva also said that she would support the Bank of Japan if it changes its monetary policy under its next governor, Kazuo Ueda. Ueda will take office Sunday to succeed current Governor Haruhiko Kuroda, who reaches the end of his term Saturday.

Amid tensions between the United States and China, high inflation and worries about the health of the banking sector triggered by the collapse of Silicon Valley Bank, the global economy is expected to mark the slowest growth in about 30 years.

Georgieva said that it would be appropriate for the BOJ to have more flexibility in its monetary policy steering as prices are rising also in Japan.

The IMF hopes to maintain its very good relationship with the BOJ, she said, adding that the IMF would offer clear support if the bank finds it necessary to revise its massive monetary easing policy.

As G-7 president, Japan is tasked with leading efforts to find ways to reverse the global economic slowdown.

Georgieva showed some understanding of G-7 members’ recent moves to reduce their dependence on China for semiconductors, mineral resources and other strategic items in order to enhance economic security, saying that securing stable supplies has become a priority for many countries following supply chain disruptions caused by the COVID-19 pandemic and the Russian invasion of Ukraine.

Meanwhile, she expressed concerns that divisions in the international community may widen if geopolitical tensions heighten between China and the G-7 members, namely Britain, Canada, France, Germany, Italy, Japan and the United States plus the European Union.

According to the IMF, trade fragmentation is expected to push down the world’s gross domestic product by as much as 7 pct in total, equivalent to the combined annual GDP of Japan and Germany.

Prolonged supply constraints would increase inflationary pressure, also affecting smaller countries, Georgieva said, noting her eagerness to discuss with Japan how to minimize the negative effects.

JIJI Press

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