Inflation is the most pressing headache at the WEF in Davos

World’s central banks have started correcting their monetary policies

INFLATION has come out tops as one of the most pressing issues that need to be resolved by the global community in order to promote steady recovery of the world economy as central banks have started correcting their monetary policies. The virtual World Economic Forum (WEF) Davos Agenda 2022 meeting kicked off on a high note yesterday.

The US has already indicated that it will start hiking interest rates in March after inflation reached a 40-year high of 7 percent in the world’s largest economy.

In China, inflation has eased to 1.5 percent from a 15-month high of 2.3 percent amid efforts by the governments to secure supply as well as the re-imposition of lockdown measures in some regions as the omicron strain spread rapidly. Inflation in South Africa is forecast to have lifted marginally to 5.6 percent from 5.5 percent on the back of persistent fuel price pressures and raised food prices.

As a result, the SA Reserve Bank is expected to continue where it left off last year and raise rates at the meeting of its Monetary Policy Committee at the end of January.

In his special address yesterday, President of China Xi Jinping said the global low inflation environment had notably changed, and the risks of inflation driven by multiple factors were surfacing. Xi said if major economies slammed on the brakes or took a U-turn in their monetary policies, there would be serious negative spillovers.

“They would present challenges to global economic and financial stability, and developing countries would bear the brunt of it.

“In the context of ongoing Covid19 response, we need to explore new drivers of economic growth, new modes of social life and new pathways for people-to-people exchange, in a bid to facilitate cross-border trade, keep industrial and supply chains secure and smooth, and promote steady and solid progress in global economic recovery.”

The week-long virtual conversations will address timely global issues including climate action, Covid-19 pandemic response, economic and social resilience, and global co-operation.

Vice-President of Nigeria Yemi Osinbanjo will make a special address on Friday. Rwanda and Egypt government ministers will also deliver addresses, while World Trade Organisation director-general Ngozi Okonjo-Iweala will headline the trade session.

However, the South African government has been unresponsive to inquiries on why it has no representatives addressing the WEF gathering, especially after President Cyril Ramaphosa’s condemnation of “vaccine apartheid”.

WEF head of media content Amanda Russo said many government leaders had opted to wait for the usual Annual Meeting in early June which was postponed due the rise of Covid-19 cases.

“Many leaders, including many from the African continent, said they would prefer to wait for that in person-meeting to address the global audience,” Russo said.

“We usually have heads of state from South Africa, Rwanda, DRC, Ghana, Senegal, Tunisia. Same is true for leaders from the Middle East and South Asia. Many are waiting for the in-person event.”