Seeing is believing. Kristalina Georgieva, director of the International Monetary Fund (IMF), assured that she is witnessing one of the "most dramatic turns" she has experienced and stressed that she comes from Bulgaria, an iron curtain country that suffered not a few miseries in the communist era.
Georgieva alluded to the fact that, when it seemed that the reduction of global poverty was irreversible, it turns out that it grows again. This means that 345 million people are today in a situation of food insecurity. In the capitalist world, the world of abundance, prices skyrocket and hunger worsens.
And it is already known that, no matter how bad things are, the disaster can go further. The director of the IMF warned this Thursday about "a greater risk of recession" and an even darker global outlook. "It's more likely to get worse than better," she said. "Uncertainties remain extremely high in the context of the armed conflict and the pandemic," she stressed.
This statement, delivered at a conference at Georgetown University (Washington), prior to the annual meetings of the IMF and the World Bank, finished off the forecast that the forecast for the world economy continues to decline. How far is the 6.1% growth that was achieved in 2021.
After recalling that they have recently cut global growth three times to just 3.2% for 2022 and 2.9% for 2023, Georgieva anticipated that there will be another cut in next week's update. "Overall, we expect a global production loss of $4 trillion between now and 2026," she noted. "This is the size of the German economy, a massive setback for the world economy," she illustrated.
The bonanza that many experts, including those from the IMF, had previously painted, was the result of growth continuing its recovery from the covid crisis, and that inflation would subside, because the vaccines would help overcome problems in the distribution chain. and would make it easier for production to flourish. "But this has not happened," Georgieva lamented. “Multiple shocks, including the senseless war over the Russian invasion, have completely changed the economic landscape. Far from being transitory, inflation has become more persistent,” she ruled.
All the world's major economies, without exception, have suffered from the slowdown. He noted that the slowdown in growth is because high energy and food prices have led to tighter financial conditions and persistent supply constraints.
The IMF's gloomy projections, at a time when many countries are already feeling the impact of the Ukraine conflict, come at a time when central banks are raising interest rates. The US Federal Reserve has been the most aggressive, although this trend is becoming widespread.
According to the head of the Fund, "tightening monetary policy too much and too quickly, doing it in a synchronized manner in all countries, could lead many economies to a prolonged recession," she predicted.
Georgieva insisted that the priorities are focused on lowering inflation, with the danger of causing more damage to citizens or going into recession; apply a responsible fiscal policy that protects the most vulnerable; and give support to emerging countries and developing economies, an issue in which she warned of the influence of a strong dollar, the high cost of loans and capital flight. If this is not the case, a debt crisis could be generated that would affect 60% of low-income countries.
