The prospects for the global economy “glomerated”, said the IMF managing director on Wednesday, citing the war in Ukraine and the resulting “goods price shocks” as the main reasons.
• Also read: A dark year for the economy and risk of deterioration, says the OECD
The IMF plans to release a “further downgrade” of its growth forecasts “for both 2022 and 2023” later this month, Kristalina Georgieva said in a note prepared ahead of the G20 ministerial meeting of finance and central bank governors in Bali on Friday and Saturday.
The note was prepared ahead of the meeting of G20 finance ministers and central bank governors due to take place in Bali, Indonesia on Friday and Saturday.
“When the G20 last met in April, the IMF had just cut its global growth forecast for 2019 and 2019 to 3.6%, and we warned that this could worsen due to potential downside risks,” writes Georgieva.
“Since then, many of these risks have materialized and the multiple crises facing the world have intensified,” she continues.
For the IMF chief executive, inflation is higher than expected and has spread beyond food and energy prices.
In its note, the IMF warns in particular that this inflation could “ignite” “social tensions” within the affected countries.
“The trend towards slower growth and high inflation has continued,” the document said, citing the war in Ukraine but also new containment measures in China to combat the spread of COVID-19 as causes for this situation. or the tightening of monetary policy by the central banks of countries like the United States.
One of the main concerns for the IMF is “rapidly escalating food insecurity”, with its most serious impact on the poorest sections of the population.
To counteract this problem, the IMF preaches the continuation of “multilateralism”, citing the lifting of recently imposed restrictions on food exports as an example.
“Continued international cooperation is also needed to end the pandemic, achieve net-zero emissions (carbon dioxide) by mid-century, support vulnerable economies, and reform international corporate taxation,” the IMF said.
Finally, to illustrate this need for cooperation, the Managing Director of the IMF quotes a Balinese proverb: “menyama braya” or “everyone is a brother or sister”.