The global economy is headed for its weakest period of growth since 1990 due to higher interest rates set by the world’s major central banks
UPDATE – Thu, 4/6/23 at 8:45pm
Washington: The head of the International Monetary Fund has warned that the global economy is headed for its weakest growth period since 1990, as higher interest rates set by the world’s major central banks push up borrowing costs for households and businesses, according to a media report.
Last year’s sharp slowdown in the world economy will continue until 2023, following the aftershocks of the coronavirus pandemic and Russia’s invasion of Ukraine, IMF Managing Director Kristalina Georgieva said, according to The Guardian. years and is likely to continue for the next five years.
In her closing speech ahead of next week’s IMF spring meetings in Washington, she said global growth would remain around 3% for the next five years – the lowest medium-term growth forecast since 1990.
“This makes it all the more difficult to reduce poverty, heal the economic wounds of the COVID-19 crisis, and provide new and better opportunities for all,” Georgieva said.
In her downbeat assessment as the world grapples with the worst inflation shock in decades, she said economic activity was slowing, especially in advanced economies. Low-income countries are also facing rising borrowing costs and falling demand for exports, although there is some momentum in developing countries including China and India, according to media reports.
Ahead of the IMF’s revised economic forecast next week, Georgieva said global growth would almost halve in 2022, slipping from 6.1% since an initial rebound from the Covid pandemic in 2021 to 3.4%. Global growth is expected to dip below 3% in 2023 and remain weak in the coming years due to high inflation, rising borrowing costs and heightened geopolitical tensions, she said.
She warned that as much as 90% of advanced economies will experience lower growth rates this year and that economic activity in the United States and the euro zone will be hit by higher interest rates.
Likening the challenge to “climbing one ‘big mountain’ after another,” Georgieva said there were more problems to overcome: “First it was COVID-19, then Russia’s invasion of Ukraine, inflation and the cost of living crisis, every day the Individuals have been hit.”
“So far, we’ve proven to be resilient climbers. But the road ahead – especially the road to returning to strong growth – is bumpy and foggy, and the ropes that hold us together now may be stronger than they were a few years ago. Weaker,” the outlet quoted her as saying.
