STORY: “Our world economy is like [a] ship in choppy waters.”
The head of the International Monetary Fund warned that the outlook for the world economy was darkening - prompting the IMF to lower its global growth forecast for 2023 for the fourth time this year.
Speaking at Georgetown University Thursday, IMF Managing Director Kristalina Georgieva cited shockwaves caused by the global health crisis, Russia's invasion of Ukraine and climate disasters as signs that the global economy could get much worse – and that as a result the IMF would downgrade its current 2.9% global growth projection when it releases its World Economic Outlook next week.
"We are experiencing a fundamental shift in the world economy, from one of relative predictability - with a rules-based framework on international economic cooperation, very low interest rates, low inflation - to a world with more fragility, greater uncertainty, higher economic volatility, geopolitical confrontations, and more frequent and devastating natural disasters. A world in which any country can be thrown off course more easily and more often.”
She added that all of the world's largest economies - Europe, China and the United States - were now slowing down, which was dampening demand for exports from emerging and developing countries, already hit hard by high food and energy prices.
The war in Ukraine and global economic risks will dominate next week's annual meetings of the IMF and the World Bank in Washington, which bring together finance ministers and central bankers from around the world.
Overall, the IMF expects global output to shrink by $4 trillion between now and 2026. That is roughly the size of the German economy and amounts to what Georgieva called a "massive setback."