Global financial stability is in a foggy situation… Concern about stumbling in real estate sectors

Yesterday, the International Monetary Fund urged central banks to “move firmly to return inflation to its target rate”, in a report by the authority that sheds light on uncertain conditions on the level of financial stability.
In order to confront inflation, which is at its highest levels since the early 1980s and is feared to become “entrenched”, central banks must continue to raise interest rates, according to the report published yesterday.
On Thursday, Kristalina Georgieva, Managing Director of the International Monetary Fund, called on central banks to “more will to act now and together,” noting that “there is an urgent need to stabilize the economy.”
According to “French”, inflation rates increased due to the damage to the global economy due to the Covid-19 epidemic and supply chain disruptions, and the exacerbation of inflation due to the Russian-Ukrainian war and its repercussions on food and energy prices.
The International Monetary Fund, which is holding its annual meetings in Washington this week in attendance for the first time since 2019, said that clear negotiations on the leaders’ goals would be necessary “to maintain credibility and avoid undue market volatility.”
However, the Fund acknowledged that the increasing difficulties are facing both developed economies and emerging countries.
Financial markets are under pressure as investors avoid risk amid economic and political uncertainty.
The tightening of monetary policies also led to a decline in the prices of financial assets, which increased the negative outlook for the economy, all of which reinforced fears of a recession in the future.
In addition, the Fund also expressed its concern about “stumbling in the real estate sectors in several countries, which raises concern that these difficulties will extend to the banking and economic sectors in general.”
This is the case in China, where the real estate sector is undergoing a sharp turnaround with declining sales of new homes during the epidemic, which has caused liquidity problems for many debt-laden developers.
The failure of the contractors may damage the banking sector on a large scale, according to the estimates of the International Monetary Fund.
Finally, the Fund highlighted the increasing difficulties that emerging or low-income countries are facing with rising interest rates on dollar loans, due to inflation.