You have been given a new task from the boss and it is to provide a report and presentation to the Board of Directors about the impacts of forecasted global economic growth and further to provide required actions upon. This is the email that you have received today from him: Hello team, International Monetary Fund has released its semi-annual World Economic Outlook and it is translated to a sluggish global growth. It says: The baseline forecast is for growth to slow from 6.1 percent last year to 3.2 percent in 2022, 0.4 percentage point lower than in the April 2022 World Economic Outlook. Lower growth earlier this year, reduced household purchasing power, and tighter monetary policy drove a downward revision of 1.4 percentage points in the United States. In China, further lockdowns and the deepening real estate crisis have led growth to be revised down by 1.1 percentage points, with major global spillovers. And in Europe, significant downgrades reflect spillovers from the war in Ukraine and tighter monetary policy. Global inflation has been revised up due to food and energy prices as well as lingering supply-demand imbalances, and it is anticipated to reach 6.6 percent in advanced economies and 9.5 percent in emerging market and developing economies this yearupward revisions of 0.9 and 0.8 percentage point, respectively. In 2023, disinflationary monetary policy is expected to bite, with global output growing by just 2.9 percent. For emerging market and developing economies, the negative revisions to growth in 202223 reflect mainly the sharp slowdown of Chinas economy and the moderation in Indias economic growth. The revision in emerging and developing Asia is correspondingly large, at 0.8 percentage point in the baseline for 2022. This revision includes a 1.1 percentage point downgrade to growth in China, to 3.3 percent (the lowest growth in more than four decades, excluding the initial COVID-19 crisis in 2020), owing primarily to the aforementioned COVID- 19 outbreaks and lockdowns. Likewise, the outlook for India has been revised down by 0.8 percentage point, to 7.4 percent. For India, the revision reflects mainly less favorable external conditions and more rapid policy tightening. Elsewhere, growth revisions in the baseline have been mostly on the upside. Real GDP for emerging and developing Europe is expected to shrink by 1.5 percentage points less in 2022 than predicted in the April 2022 World Economic Outlook but grow by 0.4 percentage point less in 2023, on the back of stronger-than-expected Russian export growth in 2022 and the recently announced additional sanctions on Russia in 2023. Latin America and the Caribbean has also seen an upward revision of 0.5 percentage point in 2022 as a result of a more robust recovery in the large economies (Brazil, Mexico, Colombia, Chile). The outlooks for countries in the Middle East and Central Asia and sub-Saharan Africa remain on average unchanged or positive, reflecting the effects of elevated fossil fuel and metal prices for some commodity-exporting countries. World Economic Outlook, July 2022; IMF As you are aware, we have significant proportion of out contracts in Yuan/Rupee. Not only we have good costumers in both countries but also, they provide us with a magnificent level of out labor and raw materials. Our products are categorized as both luxury and mass markets; however, we are threatened by new entrants who are capturing attentions. The Board of Directors is seeking a solid and brief report as well as presentation on what does this forecast mean to our shareholders and what would be an appropriate reaction to maintain our income margin during the sluggish growth period.

Question:

How would you response to the IMF outlook if you are in the treasurer of a Multinational Enterprise having significant business in country ? Your business is involved in both payable and receivable contracts in China. Differentiate you medium- and long-term exposure management.