International Monetary Fund (IMF) chief Kristalina Georgieva said Thursday that the world economy is expected to grow less than 3%, down from 3.4% in 2022.
At a Politico event, Georgieva said that growth is expected to remain around 3% for the next five years, the IMF’s “lowest medium-term growth forecast since 1990, and well below the average of 3.8% from the past two decades.”
That lower growth rate would be a “severe blow” to developing countries looking to make up ground economically.
“Poverty and hunger could further increase, a dangerous trend that was started by the Covid crisis,” she added.
The IMF will hold its spring meetings in Washington next week along with the World Bank. The annual event comes as central banks in the US and abroad have significantly increased interest rates in order to fight inflation.
Meanwhile, India and China are expected to account for half of global growth this year. The IMF expects economies in the US and Europe to slow, as higher interest rates weigh on demand. About 90% of advanced economies are projected to see a decline in their growth rate this year, Georgieva said.
But while wealthier nations grapple with inflation, poor ones are increasingly burdened by debt.
The IMF chief said persistently high interest rates, bank failures in the US and Europe, and deepening geopolitical divisions are threatening global financial stability.
“The path ahead — and especially the path back to robust growth — is rough and foggy, and the ropes that hold us together may be weaker now than they were just a few years ago,” Georgieva said.
“Now is not the time to be complacent. We are in a more shock-prone world, and we have to be ready for it.”
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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