The vulnerability of the global economy is growing amid attempts by the world’s central banks to contain high inflation, and the fragility of this system threatens financial instability and slowing economic growth, said IMF Managing Director Kristalina Georgieva. Her conversation with a journalist on the eve of the annual spring meetings of the IMF and the World Bank was published by the fund on the YouTube portal.
“It just can’t be that interest rates have risen this much after being low for so long and there would be no vulnerabilities. Something has to make a boom,” said Georgieva.
At the same time, the head of the IMF noted that the world economy is not moving towards a repeat of the global financial crisis of 2008, despite problems in the banking sector in the US and Switzerland. According to her, the crisis occurred due to the fact that many financial institutions kept assets on their balance sheets that turned out to be too overvalued, and now the situation is different. “The financial system, both banking and non-banking, is much cleaner,” she explained.
Nevertheless, Georgieva reminded of the possible negative consequences due to the conflict in Ukraine and the growing mistrust between the US and China. In her opinion, it is important for the West to defend its values, but the cooling of relations with other global players can lead to trade losses from $200 billion to $7 trillion, which is equivalent to 0.2-7% of world GDP. “It makes sense to strive to stay at the lower end of this spectrum of costs,” the head of the IMF advised.
Recall that in March, Georgieva warned that 2023 would be “another difficult year” for the global economy.
Source: Rosbalt
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