Kristalina Georgieva is the head of International Monetary Fund (IMF). the global economic outlook “has darkened significantly,” emphasizing that, regarding a global recession, “we cannot rule it out.”
IMF Says Global Economic Outlook ‘Has Darkened Significantly’
Kristalina Georgieva (Managing Director of the International Monetary Fund) spoke to Reuters Wednesday about the prospects of a global recession and the outlook for the global economy.
In his comments on the global economy the IMF managing Director said:
Our outlook for April’s last update has changed significantly.
She cited several factors, including a more universal spread of inflation, more substantial interest rate hikes, China’s economic growth slowdown, and mounting sanctions related to the Russia-Ukraine war.
IMF’s global growth forecast was lowered from 6.1% for 2021 to 3.6% for 2022-2023. This was “0.8 and 0.2 percentage points lower for 2022 and 2023 than projected in January,” the Fund noted at the time.
Georgieva said that the IMF will reduce its global growth outlook further this month. This will mark Georgieva’s third consecutive downgrade for this year.
Global Recession is not to be ignored
Asking about the possibility of global recession, IMF managing Director said that:
Because of the increased risk, we can’t rule out it.
“We are in very choppy waters,” she continued. Receipt risk is becoming a growing concern among investors.
Georgieva pointed out that economic data from the second quarter showed that many large economies including Russia and China had experienced contractions. However, the risk of a recession in 2023 is even more serious.
“The IMF boss stated:
It’s going to be a tough ’22, but maybe even a tougher 2023 … Recession risks increased in 2023.
Georgieva believes that slower economic growth may be a “necessary price to pay,” citing the urgent and pressing need to restore price stability.
She opined: “We need to create the same strong level of coordination between central banks and finance ministries so they provide support in a very targeted way … and don’t weaken what monetary policies are aiming to achieve.”
David Malpass, President of the World Bank warned in June about possible global recession. “For many countries, a recession will be hard to avoid … This is the sharpest slowdown in 80 years,” he said.
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