© Reuters. FILE PHOTO: The International Monetary Fund logo in Washington, US, on September 4, 2018. REUTERS/Yuri Gribas
Written by David Lauder and Andrea Shalal
WASHINGTON (Reuters) – International Monetary Fund Managing Director Kristalina Georgieva said on Thursday that the global economy has proven remarkably resilient to multiple shocks, but has yet to overcome a combination of weak growth and flat inflation.
Georgieva said in a press conference at the International Monetary Fund that the IMF’s forecast for global growth of 2.8% for 2023 “is not enough to provide opportunities for companies and individuals around the world, and what is most disturbing is the expectation of weak growth over a longer period of time.” and the World Bank Spring Meetings in Washington.
The International Monetary Fund warned on Tuesday that an outbreak of new banking system turmoil that stifles lending and sparks a rush for safe-haven assets could return global growth to 1%, tipping many economies into recession and putting significant pressure on emerging markets. economies.
Georgieva said that after recovering from the COVID-19 pandemic and suffering setbacks from high inflation and the fallout from the war in Ukraine, policymakers have two main tasks in the near term — fighting persistent inflation and protecting financial stability.
She said both were made more complicated by banking pressures from the failure of two US regional banks and the forced sale of global lender Credit Suisse.
The International Monetary Fund’s chief economist, Pierre-Olivier Gourinchas, told Reuters on Tuesday that policymakers should not pause their fight against inflation over financial stability concerns.
Georgieva said being vigilant about emerging risks is “critical”.
“Central banks need to address financial stability risks as they arise, working closely with regulators and supervisors,” Georgieva said. “The key is to watch for risks that may be hiding in the shadows, in banks and non-bank financial institutions or in sectors such as commercial real estate.”
The International Monetary Fund issued its lowest global growth forecast for five years since it began issuing such forecasts in 1990, with growth projected at 2.8% in 2023 and then hovering around 3% through 2028. Georgieva said this was due to lagging productivity and potential Fragmentation of the global economy.
The outlook, she said, “is not horrific. We are not in a recession.” “In my book, we’re not in a great place, we’re seeing the stakes go up, but we now have a proven track record over the past years of being terrific resilience.”