The managing director of the International Monetary Fund (IMF), Kristalina Georgieva, and the president of the World Bank, David Malpass, revealed today as part of the first session of the Spring Meetings, in Washington, that next year there will be a global recession, due to because a third (a third) of the world economy will have two quarters of negative growth between this year 2022 and 2023.
They indicated that for this reason US$4 trillion will be lost as a result of the slowdown in the world economy between now and 2026, “and that is the size of Germany”, given that the crisis worsens and inflation refuses to go down.
There is a real risk, debt levels have worsened, and rising interest rates represent an additional burden, Malpass said.
There is a slowdown in the three key economies of the world and this is in the Euro zone, in China, and in the United States.
In the Euro zone there is an increase in the price of gas, in China there is less growth and there is volatility in housing; while in the case of the United States, although the labor market is still strong, it is losing momentum due to the increase in interest rates.
Addressing Multiple Crises in an Era of Volatility was the title of the inauguration of the joint activities of the International Monetary Fund (IMF) and the World Bank, as part of the Annual Meetings, held in Washington for the first time in three years of face-to-face, due to the Covid-19 pandemic.
Georgieva drew attention to adopt actions in three areas, the first aimed at containing inflation, which she defined as a dramatic tax for the poor; realizing that if the contraction becomes exaggerated, the effects will also be felt.
He argued that working together on monetary policy and fiscal policy is essential, because otherwise there will be a monetary policy on the brakes and the other with its foot on the accelerator.
Malpass indicated that the World Bank, in its latest poverty report, released two weeks ago, reveals that there are 70 million more people in poverty and a significant reduction in average income.
We think about sharing prosperity, but it hasn’t really happened and ground is being lost, he added.
Georgieva stressed that this week of Annual Meetings is of the utmost importance due to the difficult time for people, because there have been unthinkable moments with serious consequences, such as the Covid-19 that is still going on; Russia’s invasion of Ukraine, dramatic consequences in many parts, and climatic disasters on all continents.
“People are exhausted,” he stressed about it. Today, the world is much more fragile and volatile, with consequences to deal with, including climate problems, he noted.