(Washington) The spring meetings of the International Monetary Fund (IMF) and the World Bank (WB) are due to begin on Thursday, after the publication of global growth forecasts on Tuesday, in a charged climate, between the need for reforms, repeated crises and struggling economy.
The update of the global economic forecasts will mark the unofficial start of the meetings at the headquarters of the two institutions in Washington, but the managing director of the IMF, Kristalina Georgieva, has already given an idea of the trend on Thursday, with a global growth forecast below 3%.
In itself, nothing exceptional: during the last update, in January, the IMF was already forecasting growth at 2.9%, the Bank showing itself to be even more pessimistic, according to its president, David Malpass.
“Global growth should be weak this year, at 2%,” said Mr. Malpass during a press conference call on Monday, an estimate slightly higher for the WB, however, since it forecast 1.7% for 2023 in January.
But this is likely to last, as the Fund does not foresee global growth exceeding 3% on average annually by 2028, either, as Ms.me Georgieva, “our weakest medium-term outlook since 1990”.
At the end of March, the WB was even more negative, expecting annual global growth of 2.2% on average by 2030, the weakest decade for more than 40 years.
A significant slowdown, which comes as the world faces a series of unprecedented challenges, between the consequences of global warming, the risks of fragmentation of world trade or a generalized debt crisis.
In order to deal with it, a reform of the international financial institutions (IFI) is increasingly demanded by a certain number of States, the United States in particular having declared itself in this direction.
In an interview with AFP, Treasury Secretary Janet Yellen also recalled that she “wants a reform of the missions”, in particular of the World Bank and its subsidiaries, in order to add “resilience in the face of climate change, pandemics and conflicts among the central missions”.
“We want to carry out other reforms during the rest of the year, this will be part of the discussions at the next IMF meetings as well as at the annual meetings of the IMF and the WB in Morocco”, next October. , added M.me Yellen.
More vulnerable countries
This development should start with the regional investment banks and the WB, under the direction of its next president, a priori the American candidate, Ajay Banga, the only candidate.
It must intervene quickly, however: the ecological transition of emerging and low-income countries will require at least 1000 billion dollars per year over the next few years, recalled Kristalina Georgieva, a sum that the IFIs do not currently have the means to distribute.
This will require that “our richest members help fill the gaps” in terms of fundraising, she insisted, while Mr. Banga wants to succeed in bringing the private sector on board, once at the head of the WB .
These subjects will be among the main ones discussed during these spring meetings, and a first series of announcements should take place on this occasion, in particular concerning the borrowing capacities of the BM and its subsidiaries, assured AFP Mr.me Yellen.
This will not prevent the IFIs from stressing several other points of concern, starting with the risks of destabilization of the financial sector, if the fight against inflation pushes the central banks to raise their rates further.
David Malpass thus recalled the “long-term risks caused by the gap between the zero-rate assets of the last decade and those of the last few months, after the rate hike” which will take time “to be digested, in a context persistent inflation and a weak dollar”.
Reducing inflation remains the priority, insisted Thursday Mme Georgieva, for whom central banks “must do more to guarantee financial stability”.
The other consequence of this rise in rates is that more and more low-income countries are approaching the risk of a debt crisis. This is already the case for 15% of them, recalled the Director General and 40% of others are close to this situation, not to mention emerging countries such as Tunisia, Pakistan or Ghana. .
To deal with it, the IFIs will need more means, which their respective managements will try to remind the representatives of the States over the next few days, if they want to avoid an even heavier economic climate.