Inflation is rising worldwide. As a result, the borrowing rate is increasing globally. As a result, long-term supply chain disruptions are disrupting the global economy. If this continues, the risk of recession will soon increase, the head of the International Monetary Fund has expressed concern.
IMF chief Kristalina Georgieva said on Thursday that the international organization will reduce its growth rate for next year in an upcoming report as a result of these persistent problems, the New York Times reported. According to him, this is a dark picture of economic distress.
Through this, the IMF chief showed a real example of how last year’s global pandemic, inflation and then the war in Ukraine affected Russia’s economy.
In a speech at Georgetown University, IMF Managing Director Georgieva said, ‘Multiple shocks, including senseless wars, have completely changed the economic picture. Instead of being temporary, inflation has become more permanent.’
Policymakers at the meeting will work to better coordinate their responses to inflationary pressures and recession risks while preparing for the impact of higher interest rates.
Treasury Secretary Janet L. “The immediate task for major economies facing high inflation is to return to a stable price environment,” Yellen said in a speech at the Center for Global Development on Thursday. But it is important to recognize that the macroeconomic strength of developed countries can be transmitted internationally.’
Yellen also said she thinks the IMF and multilateral development banks should be ready to help developing economies if a debt crisis occurs. Also many emerging markets may require ‘significant debt relief’.
According to the IMF, countries controlling about a third of the global economy will experience two consecutive quarters of contraction by 2022 or 2023. Even when growth is positive, real incomes shrink and rising prices lead to a recession-like situation.
In the speech, Georgieva painted a grim portrait of the world’s economic woes. He said that Europe is currently feeling the price of Russian gas, China’s market is experiencing a deep recession, inflation and rising interest rates are creating doubts among consumers and the US economy is also losing momentum due to the investment freeze.
Emerging market and developing economies are in a worse position to cope with higher food and energy prices, especially as demand for their exports declines.
According to Georgieva, by 2026 global losses are expected to be around $4 trillion, which is the size of the national economy of Germany. Undoubtedly, this is going to be a huge blow to the global economy. Even this situation is more likely to be worse than better.
(October 7)