IMF: American Monetary Policy May Harm Developing Nations
According to an IMF note obtained by Reuters, the monetary policy of the United States will play a major role in driving global growth patterns, potentially harming the economies of developing nations.
The note, which was prepared for the meeting of the G20 in St. Petersburg this Thursday and Friday, warns of the problems that could come from volatility in currency markets. While the IMF acknowledges the importance of allowing fluctuations in response to market changes, it cautions that a potential announcement of the U.S. tapering of quantitative easing could send undesirable shockwaves through worldwide currency markets. In addition, it warns that such a step will have long-term effects for the growth prospects of some of the largest developing economies, such as Brazil, China, and India.
The IMF also expressed concern about the potential for a global economic recovery, citing the institution of a consumption tax in Japan, the lack of stability in the European banking system, and rumors of the U.S. tapering of quantitative easing as factors that could hamper a recovery in many of the world’s strongest economies.