IMF head expects world economic growth at less than 3 per cent in 2023

The International Monetary Fund chief said Thursday the world economy is expected to grow less than 3 per cent this year, down from 3.4 per cent last year, increasing the risk of hunger and poverty globally.

Kristalina Georgieva said growth is expected to remain around 3 per cent for the next five years, calling it “our lowest medium-term growth forecast since 1990, and well below the average of 3.8 per cent from the past two decades.” She said slower growth would be a “severe blow," making it even harder for low-income nations to catch up.

"Poverty and hunger could further increase, a dangerous trend that was started by the COVID crisis,” she said.

Georgieva's comments at a Politico event at the Meridian International Centre come ahead of next week's spring meetings of the IMF and its sister lending agency, the World Bank, in Washington, where policymakers will convene to discuss the global economy's most pressing issues.

The annual gathering will take place as central banks around the world continue to raise interest rates to tame persistent inflation and as an ongoing debt crisis in emerging economies pushes debt burdens higher, preventing nations from growing.

The IMF head said persistently high interest rates, a series of bank failures in the US and Europe, and deepening geopolitical divisions are threatening global financial stability.

Georgieva said that countries have thus far been “resilient climbers” out of the coronavirus pandemic, which has killed almost 6.9 million people globally, according to the World Health Organisation, and has disrupted global supply chains and exacerbated worldwide food insecurity.

But advanced economies face the challenges of high inflation and poorer nations are burdened by debt, all as the United States, the European Union and others are rethinking their trade relationships with China.

Tensions with China accelerated after Russia's invasion of Ukraine in February 2022, with Chinese President Xi Jinping pledging a friendship without limits to Russian President Vladimir Putin.

Georgieva warned in her speech: “But the path ahead — and especially the path back to robust growth — is rough and foggy, and the ropes that hold us together may be weaker now than they were just a few years ago.” “Now is not the time to be complacent,” she said. “We are in a more shock-prone world, and we have to be ready for it.”