Global economy inching towards "greater uncertainty": IMF chief

Washington: The International Monetary Fund (IMF) Managing Director Kristalina Georgieva said that the global economy is moving from a sphere of relative predictability to one of greater uncertainty, PTI reported.

On Thursday, Georgieva warned that countries that share around one-third of the world economy will confront at least two successive quarters of contraction this year or in 2023.

In her speech ahead of the annual meeting of the IMF and the World Bank, she said that the next issue of the World Economic Outlook, released next week, will further downgrade the global growth projections.

"We have downgraded our growth projections three times already, to only 3.2 per cent for 2022 and 2.9 per cent for 2023. And as you will see in our updated World Economic Outlook next week, we will downgrade growth for next year," she said.

"We will flag that the risks of recession are rising. We estimate that countries accounting for about one-third of the world economy will experience at least two consecutive quarters of contraction this or next year. And, even when growth is positive, it will feel like a recession because of shrinking real incomes and rising prices," she said.

The IMF chief continued, "Overall, we expect a global output loss of about USD 4 trillion between now and 2026. This is the size of the German economy — a massive setback for the world economy. And it is more likely to get worse than to get better."

Citing that the uncertainty remains high due to war and the pandemic, she cautioned of more economic shocks.

"Financial stability risks are growing: rapid and disorderly repricing of assets could be amplified by pre-existing vulnerabilities, including high sovereign debt and concerns over liquidity in key segments of the financial market," she said.

She stated, "We are experiencing a fundamental shift in the global economy: From a world of relative predictability — with a rules-based framework for international economic cooperation, low-interest rates, and 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."