Another significant factor is the elevated and persistent inflation levels across countries as they grapple with food and energy price shocks and shortages.
“More recently, however, there are some signs of moderation in price pressures, which have raised expectations of an easing in the pace of monetary tightening. Alongside easing in sovereign bond yields, the US dollar has come off its highs.Capital flows to emerging market economies (EMEs) remain volatile and global spillovers pose risks to growth prospects,” the report stated.
The global economy has been hit by multiple shocks which have led to globalisation of inflation, with advanced economies (AEs) facing multi-decadal high inflation; sustained slowdown in economic growth and trade, together with rising concerns about a possible global recession and deteriorating global food and energy security situation.
It has also affected the realignment of global supply chains and led to policy-induced deglobalisation. The emerging market economies (EMEs) have been facing an additional challenge from threats to their external sector stability, as per the bulletin.