He International Monetary Fund World economic growth is expected to be around below 3% in 2023 and stay around 3% during the next five years, The agency’s managing director, Kristalina Georgieva.
It’s all about forecasting lowest medium-term growth rate of global lender since 1990and well below the average growth of 3.8% registered in the last two decades.
In the same vein, this week the World Bank, which warned that the average potential growth of the world economy will plummet to 2.2% per year until 2030, the lowest level in the last three decadesunless the authorities take ambitious initiatives to boost labor supply, productivity and investment.
Georgieva claimed that strong and coordinated monetary and fiscal policy measures to respond to the COVID-19 pandemic and Russia’s invasion of Ukraine they had avoided a much worse outcome in recent years, but that the growth prospects remain weak in both the short and medium termgiven the persistent high inflation.
“Despite the surprising endurance of the labor markets and consumer spending in most advanced economies, and the drive to reopen Chinawe hope that the world economy grow less than 3% in 2023he said in prepared remarks ahead of next week’s spring meetings of the IMF and World Bank.
“With the increase in geopolitical tensions and still high inflation, a robust recovery remains elusive. This hurts everyone’s prospects, especially the most vulnerable people and countries,” he said at an event organized by Meridian House and Politico.
He growth almost halved to 3.4% in 2022after the impact of the Russian war in Ukraine, compared to the rebound of 6.1% observed in 2021.
Georgieva said that India and China would account for half of the global expansion in 2023but that close to 90% of advanced economies would see their growth rate decrease this year.
The low income countriesweighed down by some higher borrowing costs and weakening demand for its exportsyou will see how the growth of the per capita income remains below that of emerging economieshe claimed.
The head of the IMF asked the central banks to stay the course in the fight against inflation as long as financial pressures remain limited, but that address risks to financial stability when they arise through an adequate provision of liquidity.
the recent bank failures in Switzerland and the United States they have exposed failures in risk management in individual banks and gaps in supervision.
“The key is look out carefully risks in banks and non-bank financial institutionsas well as weaknesses in sectors such as real estate business,” he added. “Now is not the time for complacency.”
Although monetary authorities have responded quickly to recent tensions in the sector, concerns remain about possible “hidden” vulnerabilities in banks and non-bank institutions, he said.
To boost growth and productivity prospects, Georgieva advocated for major changes, such as a estimated spending of $1 trillion per year on renewable energy and measures to avoid fragmentation of the world economythat could subtract up to 7% from the world gross domestic product.
According to Georgieva, the Technological decoupling could cause losses of up to 12% of GDP in some countries.
Source: Ambito
