Inflation, strains on food and energy supplies, war in the Ukraine, rising jobless numbers alongside risks of a global recession: these are just a few of the factors making up a “new normal” cited by International Monetary Fund (IMF) Director Kristalina Georgieva on Thursday as darkening the outlook for the world’s economy.
Shock after shock will cause a global output loss of $4 trillion by 2026, Georgieva warned, adding the IMF has downgraded economic growth projections to 3.2 percent for 2022 and 2.9 percent for 2023.
The IMF also lowered growth projections back in April and again in July.
In a Georgetown University speech ahead of the fund’s annual meetings next week, Georgieva said there has been a fundamental shift in the global economy from a world of relative predictability to a world with more fragility and greater uncertainty.
Citing global events such as the coronavirus pandemic, Russia’s war on Ukraine and climate threats, the Bulgarian said:
In less than three years, we lived through shock, after shock, after shock.
These shocks have inflicted immeasurable harm on people’s lives. Their combined impact is driving a global surge in prices, especially on food and energy, causing a cost-of-living crisis.
During this period of heightened economic fragility, Georgieva said, it’s vital that immediate challenges be addressed to stabilize the world economy.
The IMF believes the risks of recession are rising and urges the first priority to be staying the course on fighting worldwide inflation.
International Monetary Fund (IMF) Director Kristalina Georgieva delivers a speech at Georgetown University on October 6, 2022 in Washington, DC. (Sha Hanting/China News Service via Getty Images)
Failure to do that now, she said, would likely lead to inflation becoming “de-anchored and entrenched”. She said that would cause massive harm to growth and massive harm to people, the Financial Times reports.
Georgieva said the second global economic priority ought to be creating responsible fiscal policies to protect the vulnerable in lower-income households without fueling higher inflation. She warned against indiscriminate financial support across the board because she said that would make it harder to fight inflation.
Faced with the “darkening global outlook … the risks of recession are rising,” Georgieva cautioned– announcing the crisis lender will again downgrade its 2023 forecast for the world economy, in the forecasts due to be published next week for the annual meeting.
One-third of countries are expected to see at least two quarters of contraction, and “even when growth is positive, it will feel like a recession” because of rising prices eroding incomes, she said.
The fund in July slashed its growth forecast for this year to 3.2 percent, and for next year to 2.9 percent — the third consecutive downgrade.
Finance ministers and central bank governors from more than 180 nations will gather next week in Washington for the first fully in-person meeting of the IMF and World Bank since 2019, prior to the coronavirus pandemic.
The dual meeting between the two globalist organizations in D.C. will seek to chart a joint plan for the future of the world’s economy.