IMF Chief Sees Inflation Dropping Further in 2024

FILED - 16 June 2023, Luxembourg: Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva speaks during a press conference at the European Convention Center in Luxembourg. Photo: -/European Council/dpa
FILED - 16 June 2023, Luxembourg: Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva speaks during a press conference at the European Convention Center in Luxembourg. Photo: -/European Council/dpa
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IMF Chief Sees Inflation Dropping Further in 2024

FILED - 16 June 2023, Luxembourg: Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva speaks during a press conference at the European Convention Center in Luxembourg. Photo: -/European Council/dpa
FILED - 16 June 2023, Luxembourg: Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva speaks during a press conference at the European Convention Center in Luxembourg. Photo: -/European Council/dpa

Inflation is easing faster than expected but has not been fully defeated, International Monetary Fund chief Kristalina Georgieva said on Thursday, urging central bankers to carefully calibrate their decisions on cutting interest rates to incoming data.
Georgieva said headline inflation for advanced economies was 2.3% in the final quarter of 2023, down from 9.5% just 18 months ago, and the downward trend was expected to continue in 2024.
That would create the conditions for central banks in major advanced economies to begin cutting rates in the second half of the year, although the pace and timing would vary, she told an event hosted by the Atlantic Council think tank, according to Reuters.
"On this final stretch, it is doubly important that central banks uphold their independence," Georgieva said, urging policymakers to resist calls for early rate cuts when necessary.
"Premature easing could see new inflation surprises that may even necessitate a further bout of monetary tightening. On the other side, delaying too long could pour cold water on economic activity," she said.
Georgieva said next week's World Economic Outlook would show that global growth is marginally stronger given robust activity in the United States and in many emerging market economies, but gave no specific new forecasts.
She said the global economy's resilience was being helped by strong labor markets and an expanding labor force, strong household consumption and an easing of supply chain issues, but said there were still "plenty of things to worry about."
"The global environment has become more challenging. Geopolitical tensions increase the risks of fragmentation ... and, as we learned over the past few years, we operate in a world in which we must expect the unexpected," Georgieva told an event hosted by the Atlantic Council think tank.
She said global activity was weak by historical standards and prospects for growth had been slowing since the global financial crisis of 2008-2009. The global output loss since the start of the COVID-19 pandemic in 2020 was $3.3 trillion, disproportionately hitting the most vulnerable countries.
Georgieva said the US had seen the strongest rebound among advanced economies, helped by rising productivity growth. Euro area activity was recovering more gradually, given the lingering impact of high energy prices and weaker productivity growth.
Among emerging market economies, countries like Indonesia and India were faring better, but low-income countries had seen the most severe scarring.
Given a significant and broad-based slowdown in productivity growth, the IMF's five-year outlook for global growth was just above 3%, well below its historical average of 3.8%, she said.
"Without a course correction, we are ... heading for 'the Tepid Twenties' - a sluggish and disappointing decade," Georgieva said, urging continued vigilance to restore price stability, rebuild fiscal buffers and jumpstart growth.
She said foundational reforms, such as strengthening governance, cutting red tape, increasing female labor market participation and improving access to capital could lift output by 8% in four years, she said.
Even more was possible with policies to encourage economic transformation, speeding up the green and digital transition, which could offer huge opportunities for investment, jobs and growth, she said.
Artificial intelligence offered huge potential benefits but also risks, with a recent IMF study showing that AI could affect up to 40% of jobs across the world and 60% in advanced economies, Georgieva said.



Lebanon Tourism Season Revives Economic Outlook

People are seen at the arrival lounge at Beirut International Airport, Lebanon. (Asharq Al-Awsat)
People are seen at the arrival lounge at Beirut International Airport, Lebanon. (Asharq Al-Awsat)
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Lebanon Tourism Season Revives Economic Outlook

People are seen at the arrival lounge at Beirut International Airport, Lebanon. (Asharq Al-Awsat)
People are seen at the arrival lounge at Beirut International Airport, Lebanon. (Asharq Al-Awsat)

The surge in visitors to Lebanon during Eid al-Adha and high demand for summer concert bookings are boosting hopes for a revival in tourism.

This sector is crucial for reigniting positive economic growth after about nine months of challenging conditions due to the Gaza war and subsequent border clashes between Hezbollah and Israel in southern Lebanon.

Contrary to earlier fears this month of possible Israeli strikes inside Lebanon, Ali Hamieh, caretaker Minister of Public Works and Transport, reported a daily average of 14,000 arrivals at Beirut’s Rafic Hariri International Airport, with numbers on the rise.

Jean Abboud, President of the Association of Travel and Tourism Agents, confirmed that despite initial concerns, booking rates have bounced back to 90-95% after Israeli threats of a mid-month strike. Most arrivals are Lebanese expatriates and foreign workers.

Before the summer season’s anticipated surge, Lebanon saw a 5.37% decrease in arrivals, with air traffic down by 9.34% and passenger numbers at Beirut International Airport dropping by 6.84% in the first five months of this year, totaling 2.29 million travelers compared to 2.46 million last year.

These declines were linked to the border clashes.

Lebanon’s tourism sector, generating over $5 billion annually in recent years, ranks as the country’s second most vital revenue stream after expatriate remittances, which officially approach $7 billion.

Together, they contribute more than half of Lebanon’s national income, which has dropped sharply from about $55 billion to under $22 billion due to the ongoing financial and currency crises that erupted five years ago.

Despite significant losses during peak tourism seasons like Christmas, Easter, and Eid al-Fitr, a report by Bank Audi indicated that Lebanon’s tourism revenues lost over $1 billion in the first six months of the Gaza conflict, driven by a 24% drop in tourist arrivals.

On average, tourists spend around $3,000 during their stay in Lebanon.