2023-05-04 12:55:54
The managing director of International Monetary Fund (IMF), Kristalina Georgieva, warned this Thursday of the “growing risk” that the world “can be divided into rival economic blocs”at a time when global growth is “weak”.
“After decades of increasing global integration, there is a growing risk that the world might split into rival economic blocs, and that is a scenario that would be bad for everyonealso for the population of Europe”, declared Georgieva during a virtual intervention at the Brussels Economic Forum that is being held today.
growth and inflation
He warned that this risk is increasing at the same time that global economic growth is “weak, by historical standards, both in the short and medium term.”
In this regard, he recalled that the IMF expects global growth to remain “around 3%” in the next five years, the medium-term forecast of the International Monetary Fund “lowest since 1990”.
He added that central bankers “cannot be distracted until stubborn inflation is firmly under control.”
“That means a monetary tightening that is hindering growth and exposing some financial vulnerabilities. In addition, geoeconomic fragmentation risks throwing cold water on already weak global growth,” he commented.
On the European Union, he said that, “like most advanced economies”, it faces “the same dual challenge of slowing growth and still high inflation”.
The IMF anticipates EU growth “would fall from 3.7% last year to 0.7% this year before picking up modestly followingwards,” Georgieva noted.
“At the same time, we expect inflation to decline from over 9% last year to a still high level, above 6%, this year, and that, in most countries, it does not return to the objectives until 2025″he pointed.
However, he acknowledged that the Old Continent “has proven to be resilient”, since “not long ago the clouds over Europe were much darker”, referring to the rise in energy prices due to the Russian invasion of Ukraine, “which exacerbated the cost of living crisis across the continent and hit low-income households the hardest.”
In any case, the Bulgarian politician assured that the “agile” response of politicians “guaranteed alternative gas supplies and supported homes and businesses”also noting that the community club banks have entered the phase of tightening monetary conditions with “solid” capital buffers.
“But we cannot afford to be complacent just because the worst case scenario has not materialized,” he warned, urging us to address long-term challenges such as the aging of the population, productivity or inclusion.
He noted that in recent years older workers have been seen returning to the labor market or staying longer in their jobs.
Likewise, he specified that one of the “most urgent” steps for a “robust” recovery involves “avoid the temptation of a new form of protectionism”and stressed that “recovering multilateral cooperation is essential for long-term growth everywhere.”
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