Georgieva on global growth: I don’t think anyone is saying 3% is fabulous

The director of the International Monetary Fund (IMF), Kristalina Georgieva, affirmed this Thursday that the global growth forecast for the coming years, which will be around 3%, can never be considered “fabulous”, although it is far from recession.

“If you read the numbers I don’t think anyone will say ‘oh these are fabulous numbers”, affirmed the head of the IMF in a press conference, referring to the 3% global growth forecast for the next 5 years.

This is how Georgieva responded to a question from the press about the statements by the US Treasury Secretary, Janet Yellen, who said last Tuesday that although we must remain vigilant about the risks facing the global economy, we must not “exaggerate negativity” that organizations like the IMF anticipate.

“I agree with Secretary Yellen that we have feared a recession“, but “2.8% global growth is not enough to create opportunities for businesses and individuals around the world and more worrying is the projection of weak growth in the longer term“, he pointed georgieva.

In her opinion, the two are watching “the same image”, but it is “a very complex picture”. “If we want to overcome negative growth trends that are holding us back and holding back people’s aspirations, we need to focus on action, on structural reforms. It’s hard, but necessary”, he explained.

He IMF published on Tuesday, within the framework of its spring meetings that are being held this week in Washington, its latest macroeconomic forecast report, in which it stresses that uncertainty continues to reign in the global panorama and warns that the economy will continue to slow down in 2023 and it will only grow 2.8% this year.

All this in a framework with countries still absorbing the effects of the pandemic or the Russian invasion of Ukraine, inflation still very high and more restrictive financial conditions that make recovery difficult.

“The numbers aren’t horrible either, we’re not in a recession (…) but we’re not in a great place. We see the risks increasing, but now we also have a resilient track record in recent years“, he claimed georgieva.

Priorities and challenges

In her analysis prior to the round of questions, the director of the IMF insisted again thatthis is the weakest medium-term forecast in decades” and drew a picture with underlying inflation “stubbornly tall”, with an increasing geopolitical fragmentation that “has implications for trade” and “with downside risks” which have increased.

Furthermore, he added,fighting inflation and safeguarding financial stability has become more complex with recent pressures from the banking sector”.

“We all need to keep in mind that low-income countries are particularly vulnerable given the high level of debt and the growth of their per capita income.”, he insisted.

georgieva noted three priorities: restoring price stability and safeguarding financial stability; rebuild the foundations with structural transformations (accelerate the digital revolution or the green transformation, for example); and intensify international cooperation to reduce the damage of fragmentation.

One of the main challenges, noted georgieva, is the high public debt and it is therefore essential to help refinance the debt of many countries. “We need to help them resolve their overwhelming debt burden and help ensure that the IMF can continue to support them in the future.“, said.

georgieva He recalled that a round table on sovereign debt was held yesterday and that they are already being achieved “tangible progress under the co-chairmanship of the World Bank, IMF and India as chair of the G20″.

“We have brought together public and private creditors, as well as first-time borrowers, all sitting around the table to expedite restructuring cases”, he indicated. “We met yesterday and I am very encouraged by the positive results”, he added.

georgieva He mentioned some of the agreements reached, such as improving the exchange of information on macroeconomic projections and sustainability assessments at an early stage of the debt restructuring process.

Source: EFE