WASHINGTON: The International Monetary Fund expects global economic growth to dip below three per cent in 2023 and to remain at around 3pc for the next five years, Managing Director Kristalina Georgieva said on Thursday, flagging increased downside risks.
That is the global lender’s lowest medium-term growth forecast since 1990, and well below the average growth of 3.8pc seen in the past two decades.
Georgieva said strong monetary and fiscal policy actions to respond to the Covid-19 pandemic and Russia’s invasion of Ukraine had prevented a much worse outcome in recent years, but growth prospects remained weak given persistently high inflation. Bank failures in Switzerland and the United States had exposed financial vulnerabilities that increased the downside risks for the global economy, she added.
“Despite surprisingly resilient labour markets and strong consumer demand, despite the uplift in China, we expect the world economy to grow less than 3pc this year,” she said in a speech ahead of next week’s spring meetings of the IMF and World Bank. “Growth remains historically weak now and in the medium-term.”
“With rising geopolitical tensions, with inflation still running high, a robust recovery remains elusive, and that harms the prospects of everyone, especially for the most vulnerable people and the most vulnerable countries,” she said at an event hosted by Meridian House and Politico.
Global growth dropped by almost half to 3.4pc in 2022 following the shock of Russia’s war in Ukraine from the 6.1pc rebound seen in 2021.
Georgieva said India and China would account for half of global growth in 2023.
