The director general of the International Monetary Fund (IMF) said yesterday that the world economic situation, boosted by rising inflation “will still get worse before it gets better”, acknowledging that the invasion of Ukraine has shattered the entity’s forecasts. In a speech at Georgetown University in Washington, Kristalina Georgieva said she believed the situation “is going to get worse before it gets better.”
“Uncertainty is very high”, she said, highlighting the effects of the war, pointing out that the pandemic “has not yet disappeared” and also adding that “the risks surrounding financial stability are growing”.
The director-general of the IMF said that the entity was again lowering its forecasts for the world economy in 2023, projecting a lower economic growth by four billion euros until 2026.
Georgieva also said that the institution had already lowered its global growth forecasts three times and that it now expected 3.2% for this year and 2.9% for 2023.
The director general of the IMF said that the situation could be resolved by three priorities for the economies, calling, firstly, for measures that reduce inflation, preventing it from being “entrenched” at current values. Still, she said these efforts must be balanced, otherwise they could push “many economies into a prolonged recession.”
“Central banks have to continue to respond,” she said, “even if the economy slows.”
The second priority, for Georgieva, involves budget measures that protect “the most vulnerable families and businesses”, warning that these measures must be “very well targeted” and appealing to countries to “not give subsidies to the rich”. The director general of the IMF also warned of the negative effects of generalized price controls.
Finally, Georgieva highlighted the importance of supporting emerging markets and developing economies.
