IMF chief warns Global recession risks rising

TNI Bureau: The International Monetary Fund’s managing director has warned of rising recession risks as the lender downgrades its growth forecast for next year. IMF also expects a global output loss of about $4 trillion between now and 2026.

“In less than three years we lived through shock, after shock, after shock,” Kristalina Georgieva said in a speech at Georgetown University in Washington on Thursday, ahead of the IMF-World Bank annual meetings in the US capital this month.

Georgieva cited the Covid-19 pandemic, Russia’s war in Ukraine and climate disasters that have exacerbated inflationary pressures and led to food and energy prices soaring, causing a cost-of-living crisis.

“Most economists, including at the IMF, thought the recovery would continue, and inflation would quickly subside — largely because we expected vaccines would help tame supply side disruptions and allow production to rebound,” Ms Georgieva said.

“But this is not what happened. Multiple shocks, among them a senseless war, changed the economic picture completely. Far from being transitory, inflation has become more persistent.”
[07/10, 5:03 pm] Akankshya Mahapatra: Inflation reached a four-decade high in the US and UK earlier this year, and hit a record in Europe as well.

In July, the IMF said Russia’s war in Ukraine, rising inflation and a slowdown in China had derailed the momentum of the global economy’s recovery from the Covid-19 pandemic, prompting it to lower its growth forecast to 3.2 per cent in 2022 and 2.9 per cent in 2023 after a 6.1 per cent expansion last year.

Georgieva said the coming World Economic Outlook of the fund that will be released next week downgrades growth figures for next year.

This is largely due to “the darkening global outlook” as the economy faces greater uncertainty, higher volatility, tighter financial conditions, geopolitics and natural disasters.