WASHINGTON: IMF chief Kristalina Georgieva urged global policymakers on Thursday to take concrete action to avoid a “dangerous ‘new normal'” as repeated economic shocks raise the risk of a global recession. go
In a speech ahead of the fund’s annual meetings next week, the IMF’s managing director called for “stabilizing the global economy by addressing the most urgent challenges” – including hyperinflation.
Georgieva said policymakers need to work together to “prevent this era of increasing fragility from becoming a dangerous ‘new normal’.”
But he warned that the process would be painful – and acknowledged that if central banks move too aggressively to ease price pressures, it could lead to a “prolonged” economic downturn.
Finance ministers and central bank governors from more than 180 countries will gather in Washington next week for the first fully in-person meeting of the International Monetary Fund and World Bank since 2019, before the Covid-19 pandemic.
The meetings come at a difficult time for the global economy, with the pandemic largely under control, but rising prices and rising interest rates now threaten to reverberate around the world and stall the nascent recovery.
But the IMF chief said it was too soon for major central banks to back down in the fight against inflation, which has reached its highest level in four decades.
Inflation remains stubborn, still persistent, Georgieva told AFP in an interview.
“The risk of not doing enough is greater than the risk of doing too much,” he said. “Obviously they have to do more. They have to stay the course.”
‘Shock, after shock’
Georgieva said in her speech that “risks of recession … are rising amid a gloomy global outlook,” noting that a third of countries are expected to see at least two quarters of contraction.
And “even when growth is positive, it will feel like a recession” because rising prices lead to lower incomes.
The crisis lender plans to cut its 2023 forecast for the global economy again, in a report to be published next week for the annual meeting.
