The Managing Director of the International Monetary Fund reported that there was a “fundamental shift” in the global economy.
The global economy is heading towards a world of more fragility, increased uncertainty, higher economic volatility, geopolitical confrontation, and more frequent and devastating natural disasters.
In her curtain-raising speech, Georgieva said: “The global economy is moving from a relatively predictable world, with a rules-based framework for international economic cooperation, low interest rates, and low inflation… to a world of more fragility, increased uncertainty, volatility Higher economic, geopolitical confrontations, more frequent and devastating natural disasters.”
She stressed the need to stabilize the economy, noting that the global outlook has been darkened by many shocks, including the war, and inflation has become more stable, according to the Xinhua News Agency.
The head of the International Monetary Fund added that the global institution will reduce its growth rate for next year in the updated World Economic Outlook report next week. A report revealed that its growth forecast has already tripled to just 3.2 percent for 2022 and 2.9 percent for 2023.
“We will report a higher risk of recession,” she noted.
The International Monetary Fund estimates that countries that represent about a third of the global economy will experience at least two consecutive quarters of contraction this year or next.
“And even when growth is positive, it will look like a recession due to shrinking real income and rising prices,” she added.
Overall, the International Monetary Fund expects a global output loss of about $4 trillion between now and 2026. This is the size of the German economy, and it’s a massive setback for the global economy.
The head of the International Monetary Fund urged policy makers to continue the path of reducing inflation, and to establish a responsible fiscal policy, a policy that protects the weak, without increasing inflation, while calling for joint efforts to support emerging markets and developing economies.
“The rising dollar, higher borrowing costs and capital outflows are causing a triple whammy for many emerging markets and developing economies,” Georgieva said, noting that the probability of portfolio outflows from emerging markets over the next three quarters has risen to 40 percent, which represents a possible To pose a “significant challenge” to countries with large external financing needs.