Washington(USA): Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva today urged countries to support emerging market and developing economies and also implement responsible fiscal policy in order to bring down inflation.
IMF Managing Director informed there is “fundamental shift” in the global economy.
The global economy is marching towards a world with more fragility, greater uncertainty, higher economic volatility, geopolitical confrontations, and more frequent and devastating natural disasters.
Georgieva in a curtain raiser speech said, “The global economy is moving from a world of relative predictability, with a rules-based framework for international economic cooperation, low interest rates, and low inflation… to a world with more fragility, greater uncertainty, higher economic volatility, geopolitical confrontations, and more frequent and devastating natural disasters.”
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Stressing on the need to stabilise the economy, she pointed that global outlook has darkened by multiple shocks, among them a war, and inflation has become more persistent, reports Xinhua news agency.
The IMF head added that the global institution will downgrade its growth for next year in its updated World Economic Outlook next week. Its growth projections already three times down to only 3.2 per cent for 2022 and 2.9 per cent for 2023, a report reveal.
“We will flag that the risks of recession are rising,” she noted.
The IMF estimates that countries accounting for about one-third of the world economy will experience at least two consecutive quarters of contraction this or next year.
“And, even when growth is positive, it will feel like a recession because of shrinking real incomes and rising prices,” she added.
Overall, the IMF expects a global output loss of about $4 trillion between now and 2026. This is the size of the German economy, a massive setback for the world economy.
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The IMF chief urged policymakers to stay the course to bring down inflation, and to put in place responsible fiscal policy, one that protects the vulnerable, without adding fuel to inflation, while calling for joint efforts to support emerging market and developing economies.
“A stronger dollar, high borrowing costs and capital outflows cause a triple blow to many emerging markets and developing economies,” said Georgieva, noting that the probability of portfolio outflows from emerging markets over the next three quarters has risen to 40 per cent, which could pose “a major challenge” to countries with large external financing needs.
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