(MENAFN- Trend News Agency)
The International Monetary Fund (IMF) chief said there is a
'fundamental shift' in the global economy, urging countries to
bring down inflation, put in place responsible fiscal policy, and
jointly support emerging market and developing economies, reports citing
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,' IMF Managing Director Kristalina
Georgieva said in a curtain raiser speech ahead of the 2022 Annual
Meetings of the IMF and the World Bank scheduled next week.
Stressing the urgency to stabilize the economy, Georgieva noted
that global outlook has darkened by multiple shocks, among them a
war, and inflation has become more persistent.
The IMF has downgraded its growth projections already three
times since October last year, to only 3.2 percent for 2022 and 2.9
percent for 2023, the IMF chief said, adding that the global
institution will downgrade growth for next year in its updated
World Economic Outlook next week.
'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
Overall, the IMF expects a global output loss of about 4
trillion U.S. dollars between now and 2026. This is the size of the
German economy - a massive setback for the world economy.
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
'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 percent, which could pose 'a major
challenge' to countries with large external financing needs.
More than a quarter of emerging economies have either defaulted
or had bonds trading at distressed levels; and over 60 percent of
low-income countries are in - or at high risk of - debt
The IMF chief urged countries to work together to address issues
such as food insecurity, which is now affecting a staggering number
of 345 million people, and climate change, the existential threat
Since the pandemic began, the IMF has provided 258 billion
dollars to 93 countries. Since the Ukraine-Russia war, it has
supported 16 countries with close to 90 billion dollars. This is
additional to last year's historic 650 billion Special Drawing
Rights (SDR) allocation.
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