IMF estimates that the global economy will grow more than expected and rules out a recession

The managing director of International Monetary Fund (IMF), Kristalina Georgievastated this Thursday that the global growth by 2024 will be slightly stronger than expected due to robust activity in USA and several emerging economies.

This will be stated in a speech he will deliver this morning at the Atlantic Council think tank – which was advanced by the institution – as a preamble to the spring meetings that the Fund and the World Bank will hold next week in Washington.

It will be next Tuesday when the IMF publishes its global economic outlook update (its WEO report) and today Georgieva advanced that growth will be “marginally stronger” for the reasons mentioned and also for “solid household consumption and business investment” and for alleviating supply chain issues.

Furthermore, it indicates that inflation “It is going down a little faster than expected” and “the resilience of the global economy” this “being favored by strong labor markets and an expanding workforce“, a situation that is mainly due to immigration, “which has been especially useful in countries with aging populations,” declared the managing director.

“Based on this scenario, it is tempting to breathe a sigh of relief. We have avoided a recession global crisis and a period of stagflation, as some had predicted.said the Bulgarian, who in the coming weeks will be re-elected to her position because she is the only candidate for the position.

Although Georgieva was much less pessimistic in this speech than on previous occasions, she did recognize that there is still “lots of things to worry about.”

Among them, the poor medium-term global growth prospects, which continue to be below their historical average, around 3%.

Without “a course correction”he noted, the world is heading towards “the lukewarm twenties, a slow and disappointing decade.”

Another concern is that currently “the global environment has become more challenging” and geopolitical tensions have increased “the risks of fragmentation of the World economy”.

The last effort of central banks

In Georgieva’s opinion, one of the most immediate global challenges is to recover price stability, a task that is being carried out by central bankers, who are studying “when to cut interest rates and to what extent.”

These “they must carefully calibrate their decisions based on incoming data” and, in this final stretch, “It is doubly important that they maintain their independence.”

“Authorities should resist calls for early interest rate cuts,” He stated, because ““A premature easing could generate new inflationary surprises that could even require a new episode of monetary adjustment.”

Debt, the great challenge

Another of the great challenges at a global level, which the IMF will address in its meetings next week, is debt, since the levels in most countries are “too high.”

And the pandemic required “an unprecedented fiscal response”, Georgieva recalled, which caused public debt to increase sharply, a situation that has been aggravated by high interest rates and that is especially worrying in the case of low-income countries.

“Our forecasts show that deficits remain too high to stabilize debt in more than a third of advanced and emerging economies, and in more than a quarter of low-income countries.”“, he claimed.

For all countries, rich and poor, fiscal prudence “it’s hard”, recognized, especially this year, when elections are being held in many of them.

However, Georgieva noted, for some countries “Delay is simply not an option” and the consolidation “must start now” to avoid falling into debt problems, while for countries that are already in debt “restructuring may be necessary.”

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