The Limited Times

Now you can see non-English news...

The IMF forecasts global economic growth of 3% over the next five years, the lowest since 1990


The agency's managing director calls for monitoring financial risks: "This is no time for complacency"

The managing director of the IMF, Kristalina Georgieva, on March 26 at a forum on development in Beijing (China). JING XU (REUTERS)

The managing director of the International Monetary Fund (IMF), Kristalina Georgieva, reviewed the prospects for the global economy this Thursday in Washington during a speech on the eve of the organization's Spring Meeting.

Shaken by three consecutive impacts, the pandemic, the war in Ukraine and the inflationary spiral, the world economy grew just over 3% last year, half the previous year.

This year, as well as the next five, it will be around that rate without exceeding it, for which the Bulgarian economist has called for "energetic political measures" to promote "a solid recovery."

Their expectations correspond to the forecasts made in January, when the institution saw a "turning point" in the behavior of the global economy, and they are somewhat more optimistic than those published in October, at the Autumn Meeting.

The roadmap for the world economy, which will be made explicit next week at the organization's biannual summit in Washington, warns of economic slowdown, both in the short and medium term.

“World growth in 2022 fell by almost half, from 6.1% to 3.4% [compared to 2021].

The slowdown has continued this year [and] we expect the world economy to grow below 3% in 2023."

That rate will remain virtually unchanged "over the next five years, our lowest medium-term growth forecast since 1990," Georgieva noted.

Much of the engine of growth is emerging economies, but "it is expected that around 90% of advanced economies will register a decline in their growth rate this year."

As for the countries with less income, the rate of economic expansion will remain below.

“With geopolitical tensions rising and inflation still high, a robust recovery remains difficult.

This harms everyone's prospects, especially the most vulnerable people and countries."

To boost growth, Georgieva has pointed out that three peaks must be overcome: “Fight inflation and safeguard financial stability;

improve growth prospects in the medium term, and foster solidarity to reduce global disparities”.

Georgieva has graphically referred to the three duties as "mountains to be climbed."

Stubborn inflation is the Fund's main concern.

“We hope that the central banks will stay the course in the fight against inflation”, Georgieva said, without forgetting to mention, above all, the episodes of instability recently caused in the US and Europe by the collapse of some entities.

“The key [to financial stability] is to carefully monitor the risks of banks and non-bank financial institutions,

'Shadow Banking' Threat

The shadow banking


to the rest of the financial system is by far the main challenge to stability.

"This is not the time for complacency", stressed the head of the Fund, in relation to the banks, although she has shown her confidence in a sector "in general stronger and more resistant" than, for example, in the cataclysm of the Great Recession 2008. "That said, concerns remain about hidden vulnerability, not only in banks, but also in non-banks."

To guarantee sustained development in the medium term, ambitious steps must be taken, Georgieva said, and a fundamental one is to boost productivity and growth potential, as well as "the green transformation".

“It is estimated that one trillion dollars a year is needed just for renewable energy.

This will pay dividends in terms of growth and jobs.”

Georgieva advocated for a new model of international cooperation that benefits everyone, the most advanced economies but also those that have been left behind, also at the technological level.

“Our research shows that the long-term cost of trade fragmentation could reach 7% of global GDP, which is roughly equivalent to the combined annual output of Germany and Japan.

If technology decoupling is added, some countries could suffer losses of up to 12% of GDP.

And the fragmentation of capital flows, including foreign direct investment, would be another blow to global growth prospects.

Finally, and with the ink of the umpteenth agreement signed with Argentina still fresh, Georgieva recalled the organization's contribution to propping up countries in trouble, such as new lines of financing to Ukraine or Sri Lanka, or Argentina itself, overwhelmed by hyperinflation .

The institution has lent almost 300,000 million dollars to 96 countries;

It has "a historic allocation of 650,000 million from the reserve funds [SDR, in its English acronym]" and innovations such as special windows for urgent food crises, such as that of Sri Lanka or the countries of the global south due to the interruption of food supply. grain as a result of the Ukrainian war.

For the IMF to continue to help, Georgieva said,

Follow all the information on








, or in our

weekly newsletter

Source: elparis

All business articles on 2023-04-06

You may like

News/Politics 2023-07-25T14:03:03.997Z
Life/Entertain 2023-04-10T19:04:58.477Z

Trends 24h

Business 2023-09-20T19:16:29.323Z


© Communities 2019 - Privacy

The information on this site is from external sources that are not under our control.
The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.