According to the head of the International Monetary Fund, the global economy will expand at a rate of about 3% during the following five years, which will be the weakest expansion since 1990.

The future, according to Kristalina Georgieva, is “rough and foggy,” and she cautioned that it was getting harder to work together to solve problems.

Prior to the IMF’s annual meeting, she spoke in Washington.

She demanded additional assistance for low-income nations in her statements.

“For the weakest members of our global family, additional support from wealthier countries is essential,” she said, calling for countries to boost funds for the IMF, which makes low-cost loans to countries in need.

As the effects of the Covid-19 crisis, the war in Ukraine, and the skyrocketing cost of living continue to resonate, the organization is preparing for a surge of requests for assistance or debt restructuring.

Following a post-pandemic boom in 2021, worldwide growth decreased virtually in half to 3.4% last year.

That growth was less than the 2.8% average growth over the previous 20 years. This year’s slump has persisted despite robust job markets in nations like the US.

The IMF predicted that growth would fall below 3% in 2023, with more than half of it coming from China and India.

After central banks substantially increased interest rates to stabilize skyrocketing prices, it is anticipated that growth will decline in almost 90% of advanced economies due to the burden of higher borrowing costs.

Higher borrowing rates for low-income nations coincide with declining export demand.

“That is a severe blow, making it even harder for low-income nations to catch up,” Ms Georgieva said.

“Poverty and hunger could further increase, a dangerous trend that was started by the Covid crisis,” she added.

Georgieva urged assistance for weaker nations while stating that the government should keep raising interest rates to combat inflation – “so long as financial pressures remain limited.”

“If that were to change, policymakers would face an even more complicated task, with difficult trade-offs between their inflation and financial stability objectives, and the use of their respective tools,” she said.

(Adapted from TheGuardian.com)

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