The director-general of the International Monetary Fund (IMF) said on Thursday that the world economic situation, boosted by rising inflation “it will get worse before it gets better,” acknowledging that the invasion of Ukraine has shattered the organization’s predictions.
In a speech at Georgetown University in Washington, Kristalina Georgieva said she believed the situation “it will get worse before it gets better”.
“The uncertainty is very high,” he said, pointing to the fallout from the war, noting that the pandemic “isn’t gone yet” and also adding that “risks around financial stability are increasing”.
The IMF’s director-general said the entity cut its forecasts for the global economy again in 2023, forecasting lower economic growth by €4 billion through 2026.
Georgieva also said the institution had already cut its global growth forecasts three times and now expects 3.2% for this year and 2.9% for 2023.
The IMF director general said the situation could be solved by three priorities for the economies, first of all by taking measures that reduce inflation and prevent it from remaining “anchored” in current values. Still, he said these efforts must be balanced, otherwise they could “push many economies into a prolonged recession.”
“Central banks must continue to respond,” he said, “even as the economy slows.”
The second priority, for Georgieva, is budgetary measures that “protect the most vulnerable families and businesses”, warning that these measures must be “highly targeted” and call on 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 stressed the importance of supporting emerging markets and emerging economies.
Source: DN
