Global economy is in a better place today, says US Treasury Secretary Janet Yellen

Bengaluru, Feb 23 (PTI) US Treasury Secretary Janet L Yellen on Thursday said the global economy is in a better place today than many predicted just a few months ago, and the outlook has improved.

She also stressed on the need for working together to ease the debt overhang that is holding back too many countries.

“While there are significant headwinds, it’s fair to say that the global economy is in a better place today than many predicted just a few months ago. In the fall, many were worried about a sharp economic slowdown across the world. The challenges we face are real, and the future is always uncertain. But the outlook has improved since we gathered in the fall,” Yellen said.

Speaking to reporters here, she said, in its most recent estimates, the IMF forecasts global growth of 3.2 per cent during 2023 a notable upgrade from its October report.

The progress on our global macroeconomy is a result of our collective work, and it underscores the importance of redoubling our efforts going forward, she added.
Yellen was speaking to reporters ahead of the First G20 Finance Ministers and Central Bank Governors (FMCBG) meeting under the G20 Indian Presidency scheduled on February 24 and 25 here.

Noting that we are beginning to see lower headline inflation around the globe, the Treasury Secretary said in emerging markets, financial conditions remain relatively tight, but have begun to show signs of easing.

“At the same time, we know that a number of vulnerable countries continue to face acute distress. We are not out of the woods yet. So, I am looking forward to the opportunity this week to continue our close communication with other major economies,” she said.

Speaking about actions to mitigate spillovers from Russia’s war on Ukraine, Yellen said, Vladimir Putin’s “immoral war” has exacerbated the stress on our food systems. Since last year, the United States has committed more than USD 13 billion in humanitarian and food security assistance.

“We have also rallied international financial institutions to implement a robust Action Plan to Address Food Insecurity. Further, we have worked with countries to avoid export restrictions and enable food to flow more freely including through the Black Sea Grain Initiative. This life-saving initiative has improved supply and lowered prices. It must be extended past March,” she said.

Pointing out that in December, the United States and its coalition partners implemented a cap on the price of Russian crude oil, and earlier this month they placed caps on the prices of Russian refined products like diesel and fuel oil, she said, so far, we see clear signs that our policy is working to reduce Russian revenues and stabilise global energy markets.

“Even as global oil prices have remained relatively stable over the past few months, Russian oil prices have fallen substantially. Last month, the Kremlin’s oil revenue was nearly 60 per cent lower than in the immediate aftermath of the invasion. We have continued to see emerging markets negotiate steep discounts on Russian oil which keeps oil on the global market but sharply reduces the Kremlin’s take,” she added.
Stressing on the need to work together to ease the debt overhang that is holding back too many countries, Yellen said, the IMF estimates that around 55 per cent of low-income countries are close to or in debt distress.

“I will continue to push for all bilateral official creditors, including China, to participate in meaningful debt treatments for developing countries and emerging markets in distress. Most urgent is the need to provide debt treatment to Zambia, and to commit to specific and credible financing assurances for Sri Lanka.”
She also spoke about the goal to accelerate the transition to a net-zero economy, particularly by boosting private capital flows.

About accelerating our momentum for the evolution of the multilateral development banks, the Secretary said the MDBs (multilateral development banks) have made tremendous progress in advancing poverty alleviation and inclusive development, but it’s critical that they integrate work on global challenges into their core mission to sustain progress on these priorities.