(Bloomberg) — The world’s finance chiefs are being urged by the International Monetary Fund to tighten in advance, even before arriving in Washington in the coming days.
Most Read Articles on Bloomberg
With a potentially epoch-defining U.S. election just two weeks away, and the recent global inflation crisis still barely abating, ministers and central bankers gathered in the nation’s capital with a growing sense of urgency to fix the fiscal system while they can. facing demands.
The foundation, whose annual general meeting begins locally on Monday, has already identified some of the themes it hopes to highlight in its focus on forecasts and research on the global economy in the coming days.
The IMF’s Fiscal Monitor on Wednesday features a warning that public debt levels are expected to reach $100 trillion this year, driven by China and the United States. In a speech on Thursday, Managing Director Kristalina Georgieva emphasized how this huge amount of borrowing weighs on the world.
“Our forecasts point to an unforgiving combination of low growth and high debt – a difficult future,” he said. “Governments must seek to reduce debt and rebuild buffers against the next shock. That will certainly happen, and probably sooner than we expect.”
Some finance ministers may receive further reminders before the week ends.
UK Finance Minister Rachel Reeves has already been warned by the IMF that there is a risk of a market rebound if debt is not stabilized. Tuesday will be the last fiscal data release before the October 30 budget.
Insolvency experts say Britain’s tax office is taking a tougher approach to recovering debts in a bid to squeeze out 5 billion pounds ($6.5 billion) in additional revenue.
Bloomberg Economics says:
“Despite all the talk of black holes, the overall effect of the Reeves budget will be looser rather than tighter policies than the previous administration’s plan.”
—Ana Andrade and Dan Hanson, economists. Click here for complete analysis
Meanwhile, Moody’s Ratings has scheduled a possible report on France, which currently faces intense investor scrutiny, on Friday. The company’s valuation is one notch higher than its major competitors, and the market will likely keep an eye on any downward revisions to its outlook.
As for the biggest borrowers, the already published IMF report contains a stern admonition that public finances are everyone’s problem.
story continues
“Rising debt levels and uncertainty around fiscal policy in systemically important countries such as China and the United States could cause significant spillover effects in the form of higher borrowing costs and debt-related risks for other countries,” the fund said. “There is,” he said.
Elsewhere next week, a rate cut in Canada and a hike in Russia are among the central bank moves economists expect.
Click here to see what happened over the past week. Below is a summary of what will happen in the global economy.
USA and Canada
Economists see a pair of home sales reports showing that lower mortgage rates are only helping to stabilize the U.S. residential real estate market. On Wednesday, the National Association of Realtors will release data on previously owned home sales, followed the next day by government statistics on new home sales.
Economists expect sales of existing homes and new homes to increase slightly in September. Resale is still hampered by limited inventory, which continues to drive asking prices higher and undermine affordability. While purchases of previously owned properties are still near their slowest pace since 2010, builders are taking advantage. Sales of new homes have gradually increased over the past two years thanks to incentives.
Other U.S. data to be released next week includes September durable goods orders and capital goods shipments, which will help economists fine-tune their estimates for third-quarter economic growth. The Fed also publishes the Beige Book, an anecdotal reading about the economy.
Local Fed officials who will speak next week include Jeffrey Schmidt, Mary Daly and Laurie Logan.
Meanwhile, expectations are growing that the Bank of Canada will cut interest rates by 50 basis points after inflation fell to 1.6 per cent in September and some labor market indicators remain weak.
Europe, Middle East, Africa
As with other regions, attention will largely be focused on Washington. More than a dozen appearances by members of the European Central Bank’s Board of Governors are scheduled in the United States.
Among them is President Christine Lagarde, who is scheduled to be interviewed by Bloomberg TV’s Francine Lacqua in Washington on Tuesday.
Similarly, Bank of England Governor Andrew Bailey will speak in New York on Tuesday, and Swiss National Bank Governor Martin Schlegel will attend on Friday.
The eurozone’s economic report is likely to be highlighted by Wednesday’s consumer confidence index, next day’s purchasing managers index and Friday’s ECB inflation expectations survey. Similarly, Germany’s Ifo Institute is scheduled to release its closely watched Business Confidence Index this weekend.
Apart from a possible rating assessment for France, S&P could also release reports on Belgium and Finland on Friday.
Looking east, two central banks’ decisions on Tuesday, starting with Hungary, could draw attention, leaving borrowing costs unchanged.
The Bank of Russia indicated that continued inflationary pressures could lead to further rate hikes on Friday. In September, the policy rate was raised by 100 basis points to 19%, similar to the 20% emergency hike imposed after President Vladimir Putin launched a full-scale invasion of Ukraine in February 2022. It will return to the level of
Finally, South African figures on Wednesday showed that inflation is expected to slow to 3.8% in September, raising the possibility of further interest rate cuts next month. The central bank now expects consumer price growth to remain in the lower half of its target range of 3-6% over the next three quarters.
Asia
Chinese lenders are expected to join a campaign to lower loan prime rates and revive business activity on Monday, following a push from the People’s Bank of China. One-year and five-year interest rates are expected to fall by 20 basis points to 3.15% and 3.65%, respectively.
At the end of the week, data is expected to show whether the country’s industrial profits recovered in September after falling more than 17% in August. The economy grew at its slowest pace in six quarters in the last three months, according to the latest figures.
Elsewhere in the region, PMIs were concentrated on Thursday from Japan, Australia and India.
Singapore is expected to report on Wednesday that consumer inflation slowed in September, with updates on price growth for the month also due to be released by Hong Kong and Malaysia.
On Friday, Japan will release the October Tokyo CPI, a key indicator that captures changes in corporate goods prices at the start of the second half of the fiscal year.
South Korea will release third-quarter growth figures on Wednesday, which could indicate a slight slowdown in economic momentum.
This week, South Korea will release its October trade statistics early, while Taiwan and New Zealand will also release their September trade statistics.
A number of key officials from some of the region’s central banks are scheduled to attend the IMF meeting in Washington. Reserve Bank of Australia Deputy Governor Andrew Hauser will have a fireside chat on Monday, three days after the bank releases its annual report.
Reserve Bank of New Zealand Governor Adrian Orr will speak on policy on the sidelines of an IMF meeting, and Uzbekistan’s central bank will decide on Thursday whether to suspend its second meeting after cutting interest rates in July.
latin america
Brazil watchers will be keeping an eye on the central bank’s so-called Focus Survey’s weekly forecast, scheduled for Monday.
Expectations for inflation, borrowing costs and debt indicators have taken a decidedly dark turn recently, given questions about the government’s fiscal discipline.
In Mexico, the GDP proxy data should coincide with a loss of momentum that has led many economists to revise their third-quarter growth forecasts downward. The economy is expected to slow for the third consecutive year in 2024.
Argentina’s GDP proxy data will likely show that South America’s second-largest economy is in decline and in a recession that is likely to last until 2025.
The Central Bank of Paraguay holds an interest rate setting meeting. Policymakers have kept borrowing costs at 6% for the past six months, with inflation slightly above the 4% target.
On the price front, neither investors nor policymakers will be encouraged by Brazil and Mexico’s mid-month inflation reports, given the early consensus that headline numbers will rise.
The data will not undermine the prospects for Brazil’s central bank to tighten policy again on November 6, but it also suggests that Banxico will suspend its third consecutive interest rate cut at its November 14 meeting. It will be.
–With assistance from Laura Dillon Cain, Brian Fowler, Robert Jameson, Monique Vanek, Vince Gaul, Brendan Scott, and William Horobin.
(Up-to-date information regarding the UK Tax Office is in paragraph 8)
Most Read Articles on Bloomberg Businessweek
©2024 Bloomberg LP
