International Monetary Fund (IMF) Director-General Kristalina Georgieva warned on Monday that the risk of a global recession has increased and that the world has now entered an era of “fragility and volatility”.
“We estimate that about a third of the world economy will experience at least two consecutive quarters of negative growth this year or next and that the total amount that will be lost from the global economic slowdown will reach US$4 trillion. .75 trillion) between now and 2026,” she said.
Georgieva made the remarks in a lecture, which World Bank (WB) President David Malpass also participated, marking the start of the 2022 Annual Meetings of the two institutions in Washington, where top economic leaders will discuss the global economic outlook.
These are the first face-to-face meetings in three years between the leaders of the two institutions, recalled Georgieva, who also said that the hiatus was marked by “unthinkable events that are having major consequences”: the pandemic, Russia’s invasion of Ukraine and disasters. climate on all continents.
“All this has put people in a very difficult place. They are exhausted and facing a cost-of-living crisis,” said the IMF chief, noting that the situation “is especially difficult for developing countries.”
For his part, Malpass explained that the debt levels of developing countries “are becoming more and more onerous” and that rising interest rates increase the severity of the situation, as do high rates of inflation.
With an additional 70 million poor people, according to the WB’s latest analysis, and a 4% reduction in average income, “our goal of shared prosperity is not happening” and “development inversions are taking place”, he added.
During the meeting, according to Georgieva, the main world leaders will discuss what can be done to face the complex scenario. According to her, one of the most important factors is that monetary and fiscal policies go hand in hand.
“The joint confrontation of monetary and fiscal policies this year is absolutely essential”, said the managing director of the IMF, who warned that “it will not be good” if monetary policies “slap on the brakes” while fiscal ones “step on the accelerator”.
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