To boost the prospects for growth and productivity,
Georgieva called for major step changes, including an estimated
$1 trillion a year in spending on renewable energy, and moves to
avoid the fragmentation of the global economy, which could shave
as much as 7% off global gross domestic product.
Technological decoupling could see some countries suffer
losses of up to 12% of GDP, she said.
(Reporting by Andrea Shalal; Editing by Chizu Nomiyama)
By Andrea Shalal
WASHINGTON, April 6 (Reuters) - The International
Monetary Fund expects global economic growth to dip below 3% in
2023 and to remain around 3% for the next five years, IMF
Managing Director Kristalina Georgieva said in prepared remarks
on Thursday.
That is the global lender's lowest medium-term growth
forecast since 1990, and well below the average growth of 3.8%
seen in the past two decades.
Georgieva said strong and coordinated monetary and fiscal
policy actions to respond to the COVID-19 pandemic and Russia's
invasion of Ukraine had prevented a much worse outcome in recent
years, but growth prospects remained weak in both the near- and
medium-term given persistently high inflation.
"Despite surprisingly resilient labor markets and consumer
spending in most advanced economies, and the uplift from China’s
reopening, we expect the world economy to grow less than 3
percent in 2023," she said in prepared remarks ahead of next
week's spring meetings of the IMF and World Bank.
"With rising geopolitical tensions and still-high inflation,
a robust recovery remains elusive. This harms the prospects of
everyone, especially for the most vulnerable people and
countries," she said at an event hosted by Meridian House and
Politico.
Growth dropped by almost half to 3.4% in 2022 following the
shock of Russia's war in Ukraine from the 6.1% rebound seen in
2021.
She said India and China would account for half of global
growth in 2023, but about 90% of advanced economies would see a
decline in their growth rate this year.
Low-income countries, saddled by higher borrowing costs and
weakening demand for their exports, would see per-capita income
growth staying below that of emerging economies, she said.
The IMF chief called on central banks to stay the course in
the fight against inflation as long as financial pressures
remained limited, but to address financial stability risks when
they emerge through appropriate provision of liquidity.
Recent bank failures in Switzerland and the United States
had exposed risk management failures at specific banks and
supervisory lapses.
"The key is to carefully monitor risks in banks and non-bank
financial institutions, as well as weaknesses in sectors such as
commercial real estate," she added. "Now is not the time for
complacency."
While policymakers had responded swiftly to recent stress in
the sector, concerns remained about potential "hidden"
vulnerabilities at banks and nonbanks, she said.
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