International Monetary Fund CEO Kristalina Georgieva announced Thursday that the global economy will grow less than expected next year and that there is a “Growing threat of recession”anticipating the most pressing issues of the Annual Assembly that will begin next week in Washington, including the challenge of lowering inflation and implementing “responsible fiscal policy”.
At a conference at Georgetown University, the Fund’s chief delivered the keynote address to the annual meeting of finance ministers and central bank presidents from around the world, with which the curtain rises on the Annual Assembly and they leave. establish priorities and topics for discussion.
Representatives from 190 countries, including Minister Sergio Massa, which will arrive in this capital after the board of directors of the Fund gives the green light on Friday to the second revision of the program with Argentina.
Georgieva described a complicated global landscape, of shock after shock, with a pandemic, a war and an inflation that cannot be controlled. “We are experiencing a fundamental change in the global economy: from a world of relative predictability, with international economic cooperation, low interest rates and low inflation, to a more fragile world with greater uncertainty, greater economic volatility, geopolitical clashes and more weather conditions. severe frequent and devastating disasters, a world in which any country can deviate from course more easily and more frequently, “he said.
The official stressed that he had had to lower the prospects for economic growth several times this year and also for the next. And, although the IMF predicted 2.9 months ago global growth for 2023, Georgieva announced that the projections to be announced at the Assembly will be even darker. “As you will see in our updated World Economic Outlook report next week, there will be another discount for next year “, he said, not revealing the number yet.
He explained it “The risks of recession are increasing. We estimate that the countries that make up about one third of the world economy will experience at least two consecutive quarters of contraction this or next year. And even when growth is positive, it will feel like a recession due to lower real incomes and higher prices. “
How can policymakers stabilize the economy, Georgieva asked, setting priorities for the IMF this year.
“First, stay on course to reduce inflation”, She said. “Not enough tightening would cause inflation to become unanchored and entrenched, requiring future interest rates to be much higher and more sustained, causing massive damage to growth and massive damage to people,” he added.
Secondly, he said, it is “implement a responsible tax policy, one that protects the vulnerable, without adding fuel to inflation… In other words, while monetary policy is on the brink, there should be no fiscal policy that is on gas. This would make it a very difficult and dangerous journey. “
He said that aid must be very well targeted at the most vulnerable sectors. “When high energy prices are likely to persist, governments could take action direct aid to low- and middle-income families and minimize the use of price controls. We know that controlling prices over a long period of time is neither convenient nor effective. “
“Our third priority they are joint efforts to support emerging markets and developing economies. Maintaining the flexibility of the exchange will help. But countries would also benefit from a more proactive approach and from taking precautionary measures before a crisis arises. “
As part of the Assembly, the Global Economic Outlook Report (known as WEO) will be released next Tuesday, revealing the global, regional and each country’s projections. Then they will discuss the different global and regional issues until Friday.
Source: Clarin
