The Chief of the International Monetary Fund (IMF), Kristalina Georgieva, has warned that the world economy is expected to grow less than 3% this year, down from 3.4% in 2021, increasing the risk of hunger and poverty globally. She said slower growth would be a “severe blow,” making it even harder for low-income nations to catch up. Georgieva called it “our lowest medium-term growth forecast since 1990, and well below the average of 3.8% from the past two decades.”
Georgieva’s comments come ahead of next week’s spring meetings of the IMF and its sister lending agency, the World Bank, in Washington. At the annual gathering, policymakers will convene to discuss the global economy’s most pressing issues. However, the meeting will take place as central banks around the world continue to raise interest rates to tame persistent inflation, and as an ongoing debt crisis in emerging economies pushes debt burdens higher, preventing nations from growing.
Georgieva said persistently high interest rates, a series of bank failures in the U.S. and Europe, and deepening geopolitical divisions are threatening global financial stability. She added that countries have been “resilient climbers” out of the coronavirus pandemic, but advanced economies face the challenges of high inflation and poorer nations are burdened by debt, all as the United States, the European Union, and others are rethinking their trade relationships with China.
Georgieva also warned that the path ahead, and especially the path back to robust growth, is rough and foggy, and the ropes that hold us together may be weaker now than they were just a few years ago. “Now is not the time to be complacent,” she said. “We are in a more shock-prone world, and we have to be ready for it.”
Tensions with China accelerated after Russia’s invasion of Ukraine in February 2022, with Chinese President Xi Jinping pledging a friendship without limits to Russian President Vladimir Putin. Georgieva’s comments come amid a trade war between the US and China that has disrupted global supply chains and sparked fears of a global recession.
The IMF Chief’s warning about the world economy’s growth underscores the need for governments to address the underlying structural issues that are preventing economies from growing. Policymakers need to prioritize policies that will promote sustainable economic growth and reduce the risks of poverty and hunger. With the ongoing debt crisis in emerging economies and geopolitical tensions on the rise, the IMF’s spring meetings are crucial for policymakers to discuss solutions to these pressing issues.