IMF: “Crisis without end, a third of the world in recession next year”
This is not good news. Indeed, they are really dramatic: the International Monetary Fund, through the mouth of its director general Kristalina Georgieva. Which, from Georgetown University, said that “there will be another cut in growth estimates for next year”. This would be the third cut in the forecasts for the development of the world economy that they now see a + 3.2% for 2022 and + 2.9% for 2023. The economist explained the causes of this emergency: “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, with geopolitical clashes and disasters more frequent and devastating climatic conditions, a world in which any country can be led off course more easily and more often “.
What’s more: we find ourselves in a scenario with such dark colors that the IMF launches a further alarm. It is estimated, in fact, that the countries which represent about a third of the world economy will experience at least two consecutive quarters of contraction in 2022 or 2023. Also because such strong inflation will contract the purchasing power of real incomes, making even positive GDP growth seem like a recession. For the Georgieva moreover, “risks to financial stability are growing: the rapid and disordered repricing of assets could be amplified by pre-existing vulnerabilities, including high sovereign debt and liquidity concerns in key segments of the financial market”.
To stabilize a difficult economic scenario like the one we are experiencing, the political leaders “in the first place, must keep the bar straight towards reducing inflation”. The director general of theIMF Kristalina Georgieva in a speech at Georgetown Universitysupporting monetary policies of continuous rate hikes since “an insufficient tightening would cause inflation to become un-anchored and rooted”. This to his time “would require rates much higher and sustained future interest, causing enormous damage to growth and serious consequences for people“.
But the Georgieva it also calls on governments “to implement responsible fiscal policies that protect the most vulnerable, without adding fuel to inflation”. In short, he concludes, “one should not step on the accelerator” on budgetary choices “at a time when monetary policy is slowing down“.
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