(Washington) The world economy is expected to experience one of the weakest periods of growth in decades and to be below 3% in 2023, International Monetary Fund (IMF) Managing Director Kristalina Georgieva said on Thursday. occasion of his speech launching the spring meetings of the institution.
“Despite the strength of labor markets and consumer spending in the majority of advanced economies as well as the recovery linked to the reopening of China, we anticipate growth of less than 3% for 2023,” Ms. Georgieva told an audience. of diplomats in Washington.
The IMF’s previous update to the world economy report, at the end of January, already forecast growth of 2.9% in 2023, slightly better than the first estimates published last October.
While growth should be there for the main emerging countries, particularly China and India, it should be even weaker than the IMF had hoped so far for the advanced economies. Some 90% of them see their forecasts revised downwards, even if the recession should be avoided in the majority of the cases.
Under these conditions, the continuation of monetary tightening in order to fight against inflation which remains “stubbornly high” must remain the priority, insisted the director general, despite the risks of destabilization of the financial sector.
Risks that she however considers “limited” and that central banks can prevent by “using their financial policies to ensure the stability” of the sector.
Kristalina Georgieva was also worried about the state of public finances in most countries, while public debt soared almost everywhere in the world, under the effect of the COVID-19 pandemic and then consequences of the Russian invasion of Ukraine.
The challenges to be met are significant, in particular to enable the ecological transition of emerging countries, whose needs are estimated at 1,000 billion dollars per year over the next few years. This will require “our wealthiest members to help fill the gaps” in fundraising.
Even more so when low-income countries face difficulties in accessing the debt market, due to rising costs linked to the increase in the rates of the main central banks.
These nations are often in financial difficulty: the total amount of funds made available by the IMF has risen sharply, to $300 billion, in recent months.
This could continue, as “nearly 15% of low-income countries are already in debt trouble and 45% are close to plunging into it,” Georgieva insisted.
