Corona and war in Ukraine: IMF boss warns of a split in the world economy

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IMF boss Kristalina Georgieva sees the global economy at a crossroads

Photo: Metodi Popov / IMAGO

The global economy split into geopolitical camps, unable to face global problems together - the head of the International Monetary Fund (IMF) Kristalina Georgieva warned against such a scenario, according to a previously distributed speech manuscript for the joint spring meeting of the IMF and World Bank, which begins next week in Washington.

As a result of the pandemic and the war in Ukraine, competing systems threatened to emerge with different standards for trade and technology, payment systems and reserve currencies.

"Such a tectonic shift would lead to painful adjustment costs," Georgieva warned.

Global supply chains, research and production networks would break up and would then have to be recreated.

"Poor countries and poor people would suffer most of this distortion," she said.

The emerging fragmentation is "perhaps the most serious challenge to the rules-based framework that has governed international and economic relations for more than 75 years."

It is already difficult to work together and to overcome the current crises together.

Should there be a further drift apart, it will become even more difficult to jointly meet global challenges such as climate change, said the head of the IMF.

“In a world where war in Europe causes hunger in Africa, where a pandemic can lap the globe in days and linger for years, where emissions anywhere mean rising seas everywhere, the threat of disruption to global cooperation can pose a threat to our collective Prosperity should not be exaggerated,” Georgieva said, according to the manuscript.

IMF sees weaker global economic growth

The International Monetary Fund (IMF) is also critical of the current situation with regard to global economic growth and is once again adjusting its forecast downwards.

For 143 states, which together represent 86 percent of global economic output, the growth forecast will be lowered in the coming week, said Georgieva.

She cited the Russian war of aggression in Ukraine, high inflation rates, more difficult conditions on the financial markets and the frequent and extensive corona lockdowns in China as reasons for the weaker expected growth.

The IMF had already lowered its global growth forecast by 0.5 percentage points to 4.4 percent in January as a result of the omicron wave of the corona pandemic.

The new forecast is to be presented on Tuesday at the spring meeting of the IMF and World Bank in Washington.

ktz/dpa