The executive director of the International Monetary Fund (IMF), Kristalina Georgieva, has issued a warning regarding the long-drawn-out deceleration of the global economy, which has been brought about by the ongoing pandemic and the Russian military’s incursion into Ukraine. She expressed that the global economy’s growth rate this year is anticipated to be less than 3%, with India and China predicted to account for half of the global growth in 2023.
Georgieva has further urged that poverty and famine may worsen, impeding the progress of developing countries considerably. The IMF and World Bank policymakers will convene in the forthcoming week to discuss the most pressing issues concerning the global economy.
IMF Chief Warns of Prolonged Slowdown in World Economy
International Monetary Fund (IMF) managing director Kristalina Georgieva has warned that the world economy will continue to experience a sharp slowdown this year due to the ongoing pandemic and Russia’s military invasion of Ukraine. In a speech, she stated that the world economy is expected to grow at less than 3% this year, with India and China projected to account for half of global growth in 2023. Georgieva also noted that this period of slower economic activity will be prolonged, with the next five years witnessing less than 3% growth, the lowest medium-term growth forecast since 1990.
Slower Growth a Severe Blow
The managing director of the IMF cautioned that a deceleration in growth would be a severe setback, rendering it significantly more difficult for nations with lower incomes to make progress. She emphasized that poverty and famine could be exacerbated, a perilous pattern that was triggered by the COVID outbreak. It is predicted that approximately 90% of developed economies will suffer a reduction in their growth rates this year, with elevated costs of borrowing coinciding with a weakening in demand for exports from lower-income countries. Georgieva added that although the global financial system had made significant progress since the financial crisis of 2008, there are still misgivings concerning vulnerabilities that might be obscured, not only at financial institutions but also at non-financial institutions.
Spring Meetings of IMF and World Bank
Her remarks precede the forthcoming spring meetings of the IMF and the World Bank, wherein policymakers will assemble to delve into the most pressing issues surrounding the global economy. The annual assembly will be conducted whilst central banks around the globe persistently hike interest rates to curb the frenzied inflation rates. It is anticipated that the policymakers will deliberate upon tactics to address the persistent economic deceleration and the soaring inflation rates.
Asia a Bright Spot
According to Georgieva, some momentum comes from emerging economies, and Asia, in particular, is a bright spot. India and China are expected to account for half of the global growth in 2023. However, she also noted that other countries would face a steeper climb. Georgieva emphasized that now is not the time for complacency and called on policymakers to take action to address the ongoing economic challenges.
In conclusion, the IMF chief has warned that the world economy will continue to experience a sharp slowdown due to the ongoing pandemic and Russia’s military invasion of Ukraine. She noted that this period of slower economic activity will be prolonged, with the next five years witnessing less than 3% growth, the lowest medium-term growth forecast since 1990. Georgieva called on policymakers to take action to address the ongoing economic challenges, including rising inflation rates and weakening demand for low-income countries’ exports. The IMF and World Bank policymakers will convene next week to discuss the global economy’s most pressing issues.
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