The managing director of International Monetary Fund (IMF) warned, on Thursday, April 6, that the global economy is expected to grow by less than 3% in 2023, compared to 3.4% last year. This increases the danger of hunger and poverty in the world.
Kristalina Georgieva said that growth will be around 3% in the next five years: “(It is) our lowest medium-term forecast since 1990 and well below the 3.8% average of the last two decades.”
He added that low growth would be a “serious blow” that would make it even more difficult for lower-income countries to catch up. “Poverty and hunger could increase, a dangerous trend that started with the COVID crisis,” he said.
Georgieva spoke at a Politico magazine event at the Meridian Center ahead of the annual meetings between the IMF and its sister institution, the World Bank, next week in Washington, where the leaders will discuss the most pressing issues of the global economy.
High interest rates impede economic growth
For their part, the world’s central banks continue to raise interest rates to curb persistent inflation. In addition, the debt crisis in emerging economies raises debt costs and prevents them from growing.
The head of the IMF said that the persistence of high interest rates, a series of bank failures in USA and deepening geopolitical divisions threaten global financial stability.
Georgieva pointed out that countries have shown “resilience” to emerge from the coronavirus pandemic, which has caused the death of almost 6.9 million people in the world -according to the World Health Organization (WHO)-, in addition to disrupt global supply chains and exacerbate global food insecurity.
Trade relations with China reassessed
Developed economies face the challenges of high inflation and the poorest nations are burdened with debt, while the United States, the European Union and other countries reassess their trade relations with China.
Tensions with China escalated after Russia’s invasion of Ukraine in February 2022. Chinese President Xi Jinping had already expressed boundless friendship with Russian President Vladimir Putin.
Georgieva warned in her speech the following: “The road ahead and, in particular, the road back to strong growth are rough and confusing, and the ropes that bind us may be weaker today than they were a few years ago.”
“Now is not the time to be complacent,” he added. “We are in a world that is more prone to shock and we must be prepared for it,” she said.
Source: Larepublica
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