The Russia-Ukraine war will test the resilience of the global financial system, posing a threat to financial stability and presenting policymakers with challenging trade-offs, the International Monetary Fund said.
Policymakers need to take "decisive" action to rein in rising inflation and preserve the economic recovery from the Covid-19 pandemic while avoiding a "disorderly" tightening of global financial conditions, the fund said in its latest Global Financial Stability Report on Tuesday.
"The war in Ukraine, while at this point not a global systemic event from a financial standpoint, is nonetheless anticipated to have a material impact on the economy amid heightened uncertainty about the outlook," the IMF said.
"In addition, the sharp rise in commodity prices further complicates the challenge faced by central banks in credibly bringing down inflation to target while safeguarding the post-pandemic recovery."
The severity of the disruptions in commodity markets and to global supply chains will weigh heavily on the outlook for inflation, the global economy and possibly macro-financial stability, the fund warned.
The conflict has already led the IMF to lower its global economic growth forecast this year for 143 countries, accounting for 86 per cent of the world's output, with widely varying prospects.
The war will "test the resilience of the financial system through various channels, including direct and indirect exposures of banks, non-bank financial intermediaries, and firms; market disruptions (including in commodity markets) and increased counterparty risk; acceleration of cryptoisation in emerging markets; and possible cyber-related events", the IMF said.
Emerging and frontier markets are also facing tighter financial conditions and a higher probability of portfolio outflows. The IMF forecasts outflows will rise to 30 per cent now, up from 20 per cent in October 2021.
"Amid geopolitical uncertainty, the interplay of tighter external financial conditions and the US Federal Reserve normalisation (first rate increase delivered in March and unwinding of the balance sheet expected to be faster), is likely to increase the risk of capital flight," Tobias Adrian, financial counsellor and director of the IMF’s Monetary and Capital Markets Department, said in a blog post.
In China, the world's second-biggest economy, financial vulnerabilities "remain elevated" amid ongoing stress in the real estate sector and new Covid-19 outbreaks. This has raised concerns about a growth slowdown, with possible spillovers to emerging markets.
"Financial stability risks have risen amid ongoing stress in the battered real estate sector. Extraordinary financial support measures may be needed to ease balance sheet pressures, but these would add to debt vulnerabilities down the road," Mr Adrian said.
In its policy recommendations, the IMF said that central banks should "act decisively to prevent inflation pressure from becoming entrenched and avoid an unmooring of inflation expectations".
Interest rates might have to rise beyond what is currently priced in markets to get inflation back to target in a timely way, Mr Adrian said. This may include pushing interest rates well above their neutral level.
In emerging markets, many central banks have already significantly tightened policy and they should continue to do so — depending on individual circumstances — to "preserve their inflation-fighting credibility and anchor inflation expectations", he said.
In the coming years, policymakers will also need to confront several structural issues highlighted by the war in Ukraine and the ensuing sanctions against Russia, the IMF said.
These includes the trade-off between energy security and climate transition, as well as fragmentation in capital markets that would have implications for the role of the US dollar in asset allocation, it said.
While taking steps to address energy security concerns, policymakers should intensify their efforts to achieve net-zero targets, the fund said. They should take measures to increase the availability and lower the cost of fossil fuel alternatives and renewables while improving energy efficiency. They must also scale up private finance in transition to a greener economy.
"Trade-offs between energy security (adequate, affordable supplies) and climate (regulatory mechanisms intended to increase oil and gas prices) are being laid bare as supply and price effects of international sanctions on Russia ripple across Europe and beyond," Mr Adrian said.
"There may be some setbacks in the climate transition in the immediate future, but the impetus to reduce energy dependency on Russia could be a catalyst for change."
Policymakers should also develop comprehensive global standards for crypto assets, the report said. A more robust oversight of FinTech firms and decentralised finance platforms is needed to take advantage of their benefits while mitigating their risks, the report said.
"Payment systems face similar risks as central banks seek to establish their own digital currencies that are independent of existing international networks. Regulators will also be under pressure to narrow regulatory gaps to ensure integrity and protect consumers in the fast-evolving world of crypto assets," Mr Adrian said.
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The five pillars of Islam
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More from Rashmee Roshan Lall
Company: Instabug
Founded: 2013
Based: Egypt, Cairo
Sector: IT
Employees: 100
Stage: Series A
Investors: Flat6Labs, Accel, Y Combinator and angel investors
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RESULT
Valencia 3
Kevin Gameiro 21', 51'
Ferran Torres 67'
Atlanta 4
Josip Llicic 3' (P), 43' (P), 71', 82'
UAE squad
Esha Oza (captain), Al Maseera Jahangir, Emily Thomas, Heena Hotchandani, Indhuja Nandakumar, Katie Thompson, Lavanya Keny, Mehak Thakur, Michelle Botha, Rinitha Rajith, Samaira Dharnidharka, Siya Gokhale, Sashikala Silva, Suraksha Kotte, Theertha Satish (wicketkeeper) Udeni Kuruppuarachchige, Vaishnave Mahesh.
UAE tour of Zimbabwe
All matches in Bulawayo
Friday, Sept 26 – First ODI
Sunday, Sept 28 – Second ODI
Tuesday, Sept 30 – Third ODI
Thursday, Oct 2 – Fourth ODI
Sunday, Oct 5 – First T20I
Monday, Oct 6 – Second T20I
Our legal consultant
Name: Dr Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Who was Alfred Nobel?
The Nobel Prize was created by wealthy Swedish chemist and entrepreneur Alfred Nobel.
- In his will he dictated that the bulk of his estate should be used to fund "prizes to those who, during the preceding year, have conferred the greatest benefit to humankind".
- Nobel is best known as the inventor of dynamite, but also wrote poetry and drama and could speak Russian, French, English and German by the age of 17. The five original prize categories reflect the interests closest to his heart.
- Nobel died in 1896 but it took until 1901, following a legal battle over his will, before the first prizes were awarded.
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Super Bowl LIII schedule
What Super Bowl LIII
Who is playing New England Patriots v Los Angeles Rams
Where Mercedes-Benz Stadium in Atlanta, United States
When Sunday (start time is 3.30am on Monday UAE time)
What can victims do?
Always use only regulated platforms
Stop all transactions and communication on suspicion
Save all evidence (screenshots, chat logs, transaction IDs)
Report to local authorities
Warn others to prevent further harm
Courtesy: Crystal Intelligence
How to apply for a drone permit
- Individuals must register on UAE Drone app or website using their UAE Pass
- Add all their personal details, including name, nationality, passport number, Emiratis ID, email and phone number
- Upload the training certificate from a centre accredited by the GCAA
- Submit their request
What are the regulations?
- Fly it within visual line of sight
- Never over populated areas
- Ensure maximum flying height of 400 feet (122 metres) above ground level is not crossed
- Users must avoid flying over restricted areas listed on the UAE Drone app
- Only fly the drone during the day, and never at night
- Should have a live feed of the drone flight
- Drones must weigh 5 kg or less
Pharaoh's curse
British aristocrat Lord Carnarvon, who funded the expedition to find the Tutankhamun tomb, died in a Cairo hotel four months after the crypt was opened.
He had been in poor health for many years after a car crash, and a mosquito bite made worse by a shaving cut led to blood poisoning and pneumonia.
Reports at the time said Lord Carnarvon suffered from “pain as the inflammation affected the nasal passages and eyes”.
Decades later, scientists contended he had died of aspergillosis after inhaling spores of the fungus aspergillus in the tomb, which can lie dormant for months. The fact several others who entered were also found dead withiin a short time led to the myth of the curse.
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
Company profile
Company: Rent Your Wardrobe
Date started: May 2021
Founder: Mamta Arora
Based: Dubai
Sector: Clothes rental subscription
Stage: Bootstrapped, self-funded
TOURNAMENT INFO
Fixtures
Sunday January 5 - Oman v UAE
Monday January 6 - UAE v Namibia
Wednesday January 8 - Oman v Namibia
Thursday January 9 - Oman v UAE
Saturday January 11 - UAE v Namibia
Sunday January 12 – Oman v Namibia
UAE squad
Ahmed Raza (captain), Rohan Mustafa, Mohammed Usman, CP Rizwan, Waheed Ahmed, Zawar Farid, Darius D’Silva, Karthik Meiyappan, Jonathan Figy, Vriitya Aravind, Zahoor Khan, Junaid Siddique, Basil Hameed, Chirag Suri
RESULTS
6.30pm: Handicap (rated 100 ) US$175,000 1,200m
Winner: Baccarat, William Buick (jockey), Charlie Appleby (trainer)
7.05pm: Handicap (78-94) $60,000 1,800m
Winner: Baroot, Christophe Soumillon, Mike de Kock
7.40pm: Firebreak Stakes Group 3 $200,000 1,600m
Winner: Heavy Metal, Mickael Barzalona, Salem bin Ghadayer
8.15pm: Handicap (95-108) $125,000 1,200m
Winner: Yalta, Mickael Barzalona, Salem bin Ghadayer
8.50pm: Balanchine Group 2 $200,000 1,800m
Winner: Promising Run, Pat Cosgrave, Saeed bin Suroor
9.25pm: Handicap (95-105) $125,000 1,800m
Winner: Blair House, James Doyle, Charlie Appleby
10pm: Handicap (95-105) $125,000 1,400m
Winner: Oh This Is Us, Tom Marquand, Richard Hannon
Innotech Profile
Date started: 2013
Founder/CEO: Othman Al Mandhari
Based: Muscat, Oman
Sector: Additive manufacturing, 3D printing technologies
Size: 15 full-time employees
Stage: Seed stage and seeking Series A round of financing
Investors: Oman Technology Fund from 2017 to 2019, exited through an agreement with a new investor to secure new funding that it under negotiation right now.
ICC T20 Rankings
1. India - 270 ranking points
2. England - 265 points
3. Pakistan - 261 points
4. South Africa - 253 points
5. Australia - 251 points
6. New Zealand - 250 points
7. West Indies - 240 points
8. Bangladesh - 233 points
9. Sri Lanka - 230 points
10. Afghanistan - 226 points
MATCH INFO
Newcastle United 3
Gayle (23'), Perez (59', 63')
Chelsea 0
