The managing director of the International Monetary Fund warned on Thursday that the global economy is expected to grow less than 3% in 2023, compared to 3.4% last year, which increases the danger of hunger and poverty in the world. This situation becomes more complex in countries with a high level of debt, such as Argentina.
Kristalina Georgieva said growth will be around 3% over the next five years, “our lowest medium-term forecast since 1990 and well below the 3.8% average over the past two decades.” In this regard, he stressed that low growth would be a “major blow” that would make it even more difficult for low-income countries to catch up with others.
“Poverty and hunger could increase, a dangerous trend that started with the COVID crisis”he said during a Politico magazine event at the Meridian Center ahead of the annual meetings of the IMF and its sister institution, the World Bank, next week in Washington, where leaders will discuss the most pressing issues in the global economy.
For the emerging economies, the situation becomes more complex due to rising interest rates in core markets, which raises these nations’ borrowing costs and slows their growth.
The IMF chief said the persistence of high interest rates, a string of bank failures in the US and deepening geopolitical divisions threaten global financial stability.
Georgieva said countries have shown “resilience” to emerge from the coronavirus pandemic, which has killed nearly 6.9 million people worldwide, according to the World Health Organization, as well as disrupting global supply chains and aggravate global food insecurity.
Developed economies face the challenges of high inflation and poorer nations saddled with debt, as the United States, the European Union and other countries reevaluate their trade relations with China.
Tensions with China escalated after the Russian invasion of Ukraine in February 2022. Chinese President Xi Jinping had previously expressed a boundless friendship with Russian President Vladimir Putin.
Georgieva warned in her speech: “The road aheadand in particular the path back to strong growth, It’s rough and confusing and the ropes that bind us today may be weaker than they were a few years ago.”
“Now is not the time to settle”He added. “We are in a world more prone to shock and we need to be prepared for it.”
Charles Arterburn is a seasoned business journalist for News Rebeat, where he provides comprehensive coverage of the latest trends and developments in the world of finance and economics.