“The world economy is like a ship in rough waters”, this is how Kristalina Georgieva, the managing director of the International Monetary Fund (IMF), defined the moment we live in the world.
The following week finance ministers from around the world will meet in Washington, we assume that between them Rogelio Ramírez de la Oafter two years in which it was carried out virtually.
On this occasion, prior to the meeting, the speech that traditionally serves as a prologue to the meetings was given, this time delivered at Georgetown University in Washington.
Georgieva had no qualms about saying what she thinks and what she hopes for the immediate future.
He made reference to the fact that the institution has already lowered growth forecasts three times: to only 3.2 percent for this year and to 2.9 percent for 2023.
And he issued the warning that next week the IMF will lower, once again, the growth projection for the following year.
The current situation is so fragile that the head of the IMF said that the growth figure that they will announce the following week during their meeting will be the lowest since 2009with the exception of 2020, when the pandemic hit the world economy.
In other words, a deep slowdown is expected in 2023, proof that the economic situation is still very delicate, and the IMF is the first to recognize this.
The economic downturn in 2023 will be the worst on record since the Great Recession, not considering what happened in 2020, a year that is full stop since it has gone down in the history of the great global economic adjustments.
For Kristalina Georgieva, the risks of recession are rising sharply.
In this context, the IMF estimates that countries that represent about a third of the world economy will experience at least two consecutive quarters of contraction this or next year.
Even in the positive growth scenario, the IMF warns that it will feel like a recession, due to declining real incomes and rising prices.
On this basis, Georgieva made another warning by pointing out that the dreaded stagflation, that is, economic stagnation accompanied by high inflation, is taking shape more and more.
slight hope
Despite the scenario drawn, the managing director pointed out that at the end of the day, the forecasts are just that. Georgieva acknowledged the possibility of being wrong, as happened a year ago when her economists expected that, after strong growth in 2021, the recovery would continue to be strong and price increases, transitory, we all know the story.
However, he also mentioned the occurrence of unexpected factors such as the war in Ukraine. Thus, the IMF pointed out that the economy has cooled down and inflation has become entrenched.
High energy and food prices, tighter financial conditions and persistent supply constraints have slowed growth. Georgieva has reviewed how all the world’s major economies are in trouble.
The euro zone is severely affected by the reduction of gas supplies from Russia, China suffers from pandemic-related disruptions and a deep slump in its real estate market and inflation and rising interest rates are weighing on the United States.
In short, the storm has not passed and the following week the finance ministers of the world will have to face reality, just as one of the most important financial organizations in the world does.
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