The director general of the International Monetary Fund (IMF) said that the global economic situation, driven by rising inflation, “will get worse before it gets better”, and acknowledged 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,” he said, highlighting the effects of the war, noting that the pandemic is “not gone yet” and adding that “risks around financial stability are growing.”
The director general of the IMF said that the entity lowered its forecasts for the world economy in 2023, projecting a lower economic growth of four billion euros until 2026.
Georgieva also said that the institution had already lowered its global growth forecast three times and 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 with three priorities for the economies, calling, first, for measures to reduce inflation, preventing it from becoming “entrenched” 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 if the economy slows.”
The second priority, for Georgieva, are the budgetary measures that protect “the most vulnerable families and companies”, warning that these measures must be “very well directed” and calling on countries “not to give subsidies to the rich”. The IMF director general also warned about the negative effects of widespread price controls.
Finally, Georgieva highlighted the importance of supporting emerging markets and developing economies.
Source: TSF
