Things are more likely to get worse than better, International Monetary Fund Managing Director Kristalina Georgieva predicted, as the IMF again cut its projections for global economic growth in 2023, predicting a $4 trillion drop in the world economy by 2026.
Georgieva reminds that the Russian invasion of Ukraine has dramatically changed the IMF’s views on the economy, and that the corona virus pandemic, rising inflation and worsening climate conditions are also affecting world economies by exacerbating other crises, such as food insecurity and high debt levels in lower-income countries. .
As reported by AP, she assessed that the risks of recession are growing and conveyed the IMF’s assessment that countries that make up one third of the world economy will experience at least two consecutive quarters of economic contraction this year or next.
“The global economy is suffering from the division of the world into those who are for and those who are against Russia,” warns Georgieva, specifying that this is the most dramatic consequence of the events in Ukraine, although there are still many risks, including the spillover of the conflict from Ukraine to other countries, reports Tass.
“The consequence of the block breaking of the world is that we will all be poorer – both in poor and rich countries,” Georgieva said.
She added that this division will result in the loss of “great economic efficiency that helped us to be richer”.
“If we go to the point of cutting off some parts of the world from others, there would be many poor people in rich countries, while poor countries would bear most of the burden,” said the IMF executive director.
Georgieva said that the IMF has already reduced global growth projections three times, so now they expect 3.2 percent for 2022 and 2.9 percent for 2023.
These projections come at a time when central banks around the world are raising interest rates in hopes of taming rising inflation. The US Federal Reserve has been the most aggressive in using interest rate hikes as a tool to cool inflation, although central banks from Asia to England also began raising rates this week, according to the AP.
In this regard, the Organization for Economic Cooperation and Development announced last week that the global economy will lose 2.8 trillion dollars due to the war in Ukraine.