Economic development and social dialogue

In a note published on Monday 10 January, the International Monetary Fund (IMF) indicated that emerging economies will go through episodes of ‘turbulence’ due to the rise in key rates in the United States and the Omicron variant, which represent risk factors for these economies.

Stephan Danninger, Kenneth Kang, and Hélène Poirson, IMF economists, explained that “given the risk that this could coincide with a more rapid tightening of US Federal Reserve (Fed) rates, emerging economies should prepare for episodes of economic turbulence,” stressing that these countries are already facing “high inflation” and “considerably higher public debt.”

The Fed has signalled its willingness to raise interest rates faster and more aggressively than expected to contain runaway inflation in the US, which is weighing on households and US growth.