A recovery is underway, but the economic fallout from the global pandemic could be with us for years to come. With the crisis exacerbating prepandemic vulnerabilities, country prospects are diverging. Nearly half of emerging market and developing economies and some middle-income countries are now at risk of falling further behind, undoing much of the progress made toward achieving the UN Sustainable Development Goals.

The global economy has shown resilience: macroeconomic policies are delivering, inflation is steadily declining, and financial markets have stabilized. But the recovery is slow and uneven, medium-term growth prospects are weak, and there is a risk of further divergence across countries. The key policy priorities are to (1) safeguard macroeconomic stability and rebuild buffers while enhancing prosperity through growth-oriented and green reforms and (2) bolster international cooperation to strengthen the global financial safety net and debt architecture and to support ongoing fundamental transitions that transcend borders and require joint action. The IMF—as trusted advisor, provider of financial support, and platform for cooperation—remains committed to bringing countries together to solve global challenges.

Reeling from multiple shocks, the global economic outlook looks increasingly difficult. Since last October, we have downgraded global growth and revised up inflation projections four times. Two years of pandemic, followed by the war in Ukraine, have taken a heavy toll on activity and global trade, exhausting both policy buffers and people’s patience. Now, a ‘cost-of-living crisis’ threatens livelihoods everywhere, with the most vulnerable hit the hardest, and acute food insecurity is an unbearable hardship in too many parts of the world. Multi-decade inflation highs, tightening financing conditions, rising food and energy insecurity, capital flow disruptions, and record high debt levels point to a particularly difficult and uncertain period ahead—especially in the context of slowing growth in the US, Europe, and China. The increasing frequency and intensity of climate-related disasters—devastating floods, droughts, and wildfires—adds to these challenges. While the ongoing digital revolution brings new opportunities, the recent turmoil in crypto asset markets is a reminder of the risks of unfettered digitalization.

The global policy agenda that follows recalibrates priorities to meet the new reality we are facing. The IMF also continues to adjust to respond to the rapidly evolving needs of our membership. Our flexibility has been evident over the past two years of the COVID crisis: unprecedented emergency financing; a historic Special Drawing Rights (SDR) allocation; an innovative plan to end the pandemic. Now, as we face another crisis on top of a crisis, we will continue to step up and support our member countries in every way we can—with financial resources, policy advice, and capacity development—working in collaboration with our international partners.

The book describes the difficulties of the current international corporate income tax system. It starts by describing its origins and how changes, such as the development of multinational enterprises and digitalization have created fundamental problems, not foreseen at its inception. These include tax competition—as governments try to attract tax bases through low tax rates or incentives, and profit shifting, as companies avoid tax by reporting profits in jurisdictions with lower tax rates. The book then discusses solutions, including both evolutionary changes to the current system and fundamental reform options. It covers both reform efforts already under way, for example under the Inclusive Framework at the OECD, and potential radical reform ideas developed by academics.

The global economy is at another highly uncertain moment: tentative signs of stabilization earlier this year have receded, and the outlook is increasingly risky and uncertain. At the same time, divisions within and across countries are deepening, exacerbated by rising fragmentation. Strong policy action is needed together with pragmatic approaches to find areas of common ground to respond to shared challenges. The IMF is proactively engaging with our members to chart a clear course to a stronger and more sustainable path for the global economy.

The audited consolidated financial statements of the International Monetary Fund as of April 30, 2019 and 2018

This is an open access title available under the terms of a CC BY-NC-ND 4.0 International licence. It is free to read at Oxford Scholarship Online and offered as a free PDF download from OUP and selected open access locations. Rising inequality and widespread poverty, social unrest and polarization, gender and ethnic disparities, declining social mobility, economic fragility, unbalanced growth due to technology and globalization, and existential danger from climate change are urgent global concerns of our day. These issues are intertwined. They therefore require a holistic framework to examine their interplay and bring the various strands together. Leading academic economists have partnered with experts from several international institutions to explain the sources and scale of these challenges. They gather a wide array of empirical evidence and country experiences to lay out practical policy solutions and to devise a comprehensive and unified plan of action for combatting these economic and social disparities. This authoritative book is accessible to policy makers, students, and the general public interested in how to craft a brighter future by building a sustainable, green, and inclusive society in the years ahead.

Understanding the sources of inflation persistence is crucial for monetary policy. This paper provides an empirical assessment of the influence of inflation expectations' anchoring on the persistence of inflation. We construct a novel index of inflation expectations' anchoring using survey-based inflation forecasts for 45 economies starting in 1989. We then study the response of consumer prices to terms-of-trade shocks for countries with flexible exchange rates. We find that these shocks have a significant and persistent effect on consumer price inflation when expectations are poorly anchored. By contrast, inflation reacts by less and returns quickly to its pre-shock level when expectations are strongly anchored.

The world economy is experiencing a very strong but uneven recovery, with many emerging market and developing economies facing obstacles to vaccination. The global outlook remains uncertain, with major risks around the path of the pandemic and the possibility of financial stress amid large debt loads. Policy makers face a difficult balancing act as they seek to nurture the recovery while safeguarding price stability and fiscal sustainability. A comprehensive set of policies will be required to promote a strong recovery that mitigates inequality and enhances environmental sustainability, ultimately putting economies on a path of green, resilient, and inclusive development. Prominent among the necessary policies are efforts to lower trade costs so that trade can once again become a robust engine of growth. This year marks the 30th anniversary of the Global Economic Prospects. The Global Economic Prospects is a World Bank Group Flagship Report that examines global economic developments and prospects, with a special focus on emerging market and developing economies, on a semiannual basis (in January and June). Each edition includes analytical pieces on topical policy challenges faced by these economies.