The International Monetary Fund president anticipates a 3% global growth rate over the next five years, the worst since 1990.
Kristalina Georgieva warned that cooperation to solve the challenges was becoming “rough and hazy.”
She spoke in Washington before the annual summit of the IMF.
In her remarks, she advocated for increased assistance for low-income nations.
“Additional support from wealthier countries is essential for the weakest members of our global family,” she said, urging countries to increase funding for the IMF, which provides low-interest financing to countries in need.
As the Covid-19 crisis, the conflict in Ukraine, and the escalating cost of living continue to reverberate, the organization is preparing for a surge of requests for assistance or debt restructuring.
Following a post-pandemic surge in 2021, global growth decreased to 3.4% in the previous year.
That was below the average growth rate of 3.8% over the previous two decades. Despite robust employment markets in countries such as the U.S., the slowdown has persisted this year.
The IMF estimated that growth will fall below 3% in 2023, with India and China providing more than half.
Approximately ninety percent of advanced economies are anticipated to experience a decline in growth, reflecting the weight of higher borrowing costs after central banks significantly increased interest rates to curb soaring prices.
For low-income countries, rising borrowing costs coincide with a decline in export demand.
Ms. Georgieva stated, “This is a severe blow, making it even more difficult for low-income nations to catch up.”
“Poverty and hunger could increase further, a trend that the Covid crisis initiated,” she added.
Ms. Georgieva stated that authorities should continue to raise interest rates to combat inflation – “so long as financial pressures remain limited” – while advocating for support for vulnerable nations.
“If this were to change, policymakers would be faced with an even more difficult task, involving difficult trade-offs between their inflation and financial stability objectives and the use of their respective tools,” she said.
