According to the head of the International Monetary Fund, the global economy will expand at a rate of about 3% during the following five years, which will be the weakest expansion since 1990.
The future, according to Kristalina Georgieva, is “tough and hazy,” and she cautioned that it was getting harder to work together to solve problems.
Prior to the IMF’s annual meeting, she spoke in Washington.
She demanded additional assistance for low-income nations in her statements.
She urged wealthy nations to increase contributions to the International Monetary Fund (IMF), which provides low-interest loans to developing nations. “For the weakest members of our global family, extra support from wealthier nations is vital,” she added.
As the effects of the Covid-19 crisis, the war in Ukraine, and the skyrocketing cost of living continue to resonate, the organisation is preparing for a surge of requests for assistance or debt restructuring.
Why is the IMF important and what does it do?
Are economic forecasts reliable?
Following a post-pandemic boom in 2021, worldwide growth decreased virtually in half to 3.4% last year.
The growth was less than the 2.8% average growth over the previous 20 years. This year’s slump has persisted despite robust job markets in nations like the US.
The IMF predicted that growth would fall below 3% in 2023, with more than half of it coming from China and India.
As central banks substantially increased interest rates to stabilise skyrocketing prices, it is anticipated that growth will decline in almost 90% of advanced economies due to the burden of higher borrowing costs.
Higher borrowing rates for low-income nations coincide with declining export demand.
That is a serious setback, making it even more difficult for low-income countries to catch up, according to Ms. Georgieva.
She continued, “Poverty and hunger could worsen, a dangerous trend that was sparked by the Covid issue.
Ms. Georgieva urged assistance for weaker nations while stating that the government should keep raising interest rates to combat inflation – “so long as financial pressures remain restrained.”
If things changed, she explained, “policymakers would have a far more challenging role, with significant trade-offs between their inflation and financial stability objectives, and the deployment of their respective tools.”
