The global economy faces a decade of “tepid growth” and “popular discontent” despite avoiding a much-feared recession, the IMF’s managing director Kristalina Georgieva has warned.
“The sobering reality is global activity is weak by historical standards and prospects for growth have been slowing since the global financial crisis,” Georgieva said, explaining that “inflation is not fully defeated, fiscal buffers have been depleted and debt is up, posing a major challenge to public finances in many countries.”
Combating high debt levels would be hard in a year when there are a record number of elections and at a time of heightened anxiety “due to exceptional uncertainty and years of shocks”, she said, adding that geopolitical tensions “increase the risks of fragmentation of the world economy.”
In an address to the Atlantic Council on Thursday, she added that, without measures to boost productivity and lower debt burdens, the world faced “a sluggish and disappointing” decade, which she labelled the “tepid twenties”. Georgieva’s comments come as she prepares to welcome central bank governors and finance ministers to Washington next week for the IMF and World Bank’s spring meetings.
The IMF said then that growth in global gross domestic product would stay at 3.1% in 2024 and rise to 3.2 per cent in 2025. Strong growth in the US and large developing economies such as Indonesia and India, plus a sharper than expected fall in inflation at the back end of 2023, helped boost the global economy — as did strong jobs markets and workforces boosted by a rise in immigration. “We have avoided a global recession and a period of stagflation — as some had predicted.”
However, she warned against complacency, saying the corona virus pandemic had caused an estimated $3.3tn in lost output since its emergence in 2020, with the costs disproportionately falling on the most vulnerable countries. (www.ft.com)
IMF selects Kristalina Georgieva for second term
The Executive Board of the International Monetary Fund (IMF) selected Kristalina Georgieva, a citizen of Bulgaria, to serve as IMF Managing Director for a second five-year term starting on October 1, 2024. The Board’s decision was taken by consensus.
In line with the selection process it had established on March 13, 2024 the Board held several discussions, including with Ms. Georgieva, the sole candidate nominated for the position, before making its decision. Under her leadership, the Fund introduced innovative new financing facilities, including the Resilience and Sustainability Facility and the Food Shock Window.
It replenished the Poverty Reduction and Growth Trust, with the capacity to mobilize concessional loans to its poorest members, and co-created the Global Sovereign Debt Roundtable.
It also secured a 50% quota increase to bolster the Fund’s permanent resources and agreed to add a third Sub-Saharan African chair to the IMF Board.
Georgieva has served as Managing Director since October 1, 2019. She has a Ph.D. in Economic Science and a M.A. in Political Economy and Sociology from the University of National and World Economy in Bulgaria, where she also taught from 1977 to 1991.
