Washington, Apr 6 (EFE).- The director of the International Monetary Fund (IMF), Kristalina Georgieva, predicted difficult years for the global economy, which will grow around 3% over the next five years, the lowest figure since the decade of the nineties
“This will make it more difficult to reduce poverty, heal the economy from the wounds of the crisis and provide new and better opportunities for all,” Georgieva said in a public speech in Washington on the eve of the Fund’s spring meetings, which They will celebrate next week.
In 2023 the world economy is expected to “grow less than 3%”, a year in which about 90% of advanced economies will experience a decline in their growth rate, Georgieva said, a few days before they are known (the next Tuesday) the updated IMF growth forecasts.
The Fund projects global growth to remain around 3% over the next five years, the lowest medium-term growth forecast since 1990, and well below the 3.8% average of the past two decades, it said. Georgieva.
The past few years, he said, have felt “like climbing one big hill after another, only to discover there are many more to come,” first with Covid, then with the war in Ukraine and high inflation.
“So far, we have proven to be resilient climbers. But the road ahead, and especially the road back to robust growth, is rough and confusing, and the ropes that hold us together may be weaker now than they were a few years ago,” he noted.
Georgieva noted that there are “marked differences” between groups of countries. Thus, growth will come from emerging economies and “Asia especially is a bright spot.” “India and China are expected to account for half of global growth in 2023,” she said.
“But others face a steeper climb. Economic activity is slowing in the United States and the euro area, where higher interest rates are weighing on demand,” he explained.
Georgieva also referred to the banking crisis that has been experienced in recent weeks after the fall of the US banks Silicon Valley and Signature and stated that it has been shown “that the banking sector has come a long way since the global financial crisis of 2008 ”.
“Banks today are generally stronger and more resilient, and the authorities have been remarkably swift and thorough in their actions in recent weeks,” Georgieva said, noting that however “concerns persist about vulnerabilities that may be hidden” and “now is not the time for complacency”.
Georgieva considered that there are three priorities for action to improve growth expectations in both the short and medium term, starting with the fight against inflation and safeguarding financial stability.
On this point, he considered that “there cannot be robust growth without price stability and without financial stability.”
He regretted that despite the rises in interest rates by the central banks, inflation remains “stubbornly high” and acknowledged that the efforts to reduce it are now more complex due to the turbulence experienced in the banking sector, which demonstrates how difficult it is to it is the transition from a period of low rates to the new circumstances.
The director of the IMF considered, in any case, that as long as inflation remains high, the central banks are expected to continue with their restrictive monetary policy.
It is therefore, he said, a “difficult ascent”, which involves controlling inflation, protecting financial stability and “safeguarding social cohesion” trying to “protect the most vulnerable” from the most harmful side effects.
The second major objective that Georgieva highlighted in her speech was to improve growth prospects in the medium term.
For this, it opted to increase productivity with structural reforms that accelerate the digital revolution, improve the business climate and guarantee greater inclusion.
As an example, he said that if the gap for women in labor market participation were closed, production could improve by up to 35% in countries where there is now high gender inequality.
He also stressed the need for a “big green shift” to protect the planet while creating new economic opportunities.
“Our collective goal of meeting the Paris Agreement would require redirecting trillions of dollars toward green projects,” said Georgieva, who estimated that $1 trillion a year would be needed for renewable energy projects alone.
As a third objective, Georgieva pointed out, there is the promotion of solidarity to reduce disparities, for which it must take advantage of the “force” of the IMF, which has provided almost 300,000 million dollars in new financing for 96 countries since the start of the pandemic. of covid, he recalled.
