The global economy is on track for its slowest growth since 1990, according to the director of the International Monetary Fund, as higher interest rates imposed by the world’s top central banks raise borrowing costs for families and companies.
According to The Guardian, Kristalina Georgieva, the IMF’s managing director, a dramatic slowdown in the global economy last year as a result of the Covid epidemic and Russia’s invasion of Ukraine will continue in 2023 and risk lingering for the following five years.
She stated in a preview address before the fund’s spring meetings in Washington DC next week that global growth will stay around 3% for the next five years, the lowest medium-term growth prediction since 1990.
“This makes it even harder to reduce poverty, heal the economic scars of the Covid crisis and provide new and better opportunities for all,” Georgieva said.
She said economic growth was declining across advanced nations in particular, in a pessimistic assessment as the world grappled with the greatest inflation shock in decades. While there was some impetus from developing countries such as China and India, the media source claimed that low-income countries were also suffering from increasing borrowing costs and decreased demand for their goods.
Georgieva said, ahead of the IMF’s release of revised economic predictions next week, that global growth in 2022 had fallen by nearly half since the first rebound from the Covid epidemic in 2021, falling from 6.1 percent to 3.4 percent. With high inflation, rising borrowing costs, and escalating geopolitical tensions, she predicted that global GDP would fall below 3% in 2023 and stay poor for years to come.
She predicted that as many as 90% of advanced nations’ growth rates will slow this year, with activity in the US and the eurozone hampered by increased interest rates.
Georgieva compared the struggle to “climbing one ‘big hill’ after another,” saying there were still obstacles to overcome: “First was Covid, then Russia’s invasion of Ukraine, inflation, and a cost of living crisis that impacted everyone.”
“So far, we have proven to be resilient climbers. But the path ahead – and especially the path back to robust growth – is rough and foggy, and the ropes that hold us together may be weaker now than they were just a few years ago,” she was quoted as saying by the media outlet.