IMF will lower economic forecast for 2023 again

Kristalina Georgieva, IMF chief

The head of the IMF and former World Bank head announced the IMF’s lowered forecast on Saturday

(Photo: dpa)

Berlin/Washington The prospects for the global economy are becoming increasingly gloomy. IMFCEO Kristalina Georgiewa announced in Washington on Thursday that the forecast for growth in 2023 would have to be lowered again. “We are witnessing a fundamental change in the global economy.”

It is becoming more unpredictable, more volatile and more influenced by geopolitical tensions. Europe was particularly hard hit by the consequences of the Russian attack on the Ukraine affected, in in the USA, high inflation is restricting consumer spending and in China, corona restrictions continued to slow companies down.

the IMF-Forecasts have already been adjusted downward three times. Growth of 3.2 percent is expected for this year so far, and then 2.9 percent in 2023. Next week, the IMF’s world economic report will be updated when the financial organization’s 190 member nations meet in Washington.

The risk of a recession is increasing, said Georgieva. Countries that account for around a third of global economic power would have at least two consecutive quarters of negative rates. “And even if growth is still positive, it will feel like a recession – because of contracting real wages and rising prices.”

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For comparison: in 2021 the global economy – as a recovery from the virus pandemic – had still climbed sharply by 6.1 percent. However, the war in Ukraine has pushed up energy and food prices massively, which is being felt around the world, but especially in Europe due to its heavy reliance on Russian gas and oil supplies. “It’s more likely that things will initially get worse than better,” Georgieva said.

By 2026, the IMF estimates that the global value added will be around four trillion dollars. This corresponds to the volume of the German economy and is a massive setback for the global economy.

It must now have top priority inflation to lower. Numerous central banks have recently raised interest rates in a hurry. Fiscal policy must help the poorest get through the crisis because of the high energy costs. But this must be done in a targeted manner. It should not work against the central banks.

More: ECB signals strong action despite growth concerns

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