IMF Warns of Weakest Period of Global Growth Since 1990: Calls for Central Banks to Fight Inflation and Financial Stability
According to the International Monetary Fund (IMF), the global economy is facing its weakest period of growth since 1990, with growth projected to remain around 3% over the next five years. This is well below the average of 3.8% from the past two decades. IMF Managing Director Kristalina Georgieva warned that poverty and hunger could increase further, as the Covid-19 crisis has already started that trend. About 90% of advanced economies are expected to see a decline in their growth rate this year due to higher interest rates meant to combat inflation, which could also lead to a fragmentation of capital flows. However, emerging economies in Asia, particularly India and China, are expected to account for half of global growth in 2023.
Georgieva called on central banks to continue using interest rates to fight inflation while using financial policies to ensure financial stability. She also highlighted the importance of avoiding economic fragmentation caused by geopolitical tensions and taking steps to bolster productivity. She urged richer nations to assist poorer ones by pooling their resources and funding the work of the IMF, World Bank, and other multilateral agencies, as well as through their own bilateral development programs.
The IMF is boosting efforts to support countries in crisis, providing nearly $300 billion in new financing for 96 countries since the start of the Covid-19 pandemic. However, Georgieva called for more international support, especially as official development assistance continues to fall short of the United Nations’ target of 0.7% of gross national income.
Georgieva’s comments come ahead of next week’s spring meetings of the IMF and the World Bank, where policymakers will convene to discuss the global economy's most pressing issues. As central banks worldwide increase interest rates to control inflation and emerging economies continue to struggle with a persistent debt crisis, preventing the growth of nations, the yearly assembly will take place.
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