The world economy is expected to grow less than 3 percent this year, down from 3.4 percent last year, increasing the risk of hunger and poverty globally, the head of the International Monetary Fund (IMF) has said.
Kristalina Georgieva said on Thursday that growth is expected to remain about 3 percent for the next five years, calling it “our lowest medium-term growth forecast since 1990”, adding that it would be a “severe blow” making it even harder for low-income nations to catch up.
“Poverty and hunger could further increase, a dangerous trend that was started by the COVID crisis,” she said.
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Georgieva’s comments came in advance of next week’s meetings of the IMF and its sister lending agency, the World Bank, where policymakers will convene to discuss the global economy’s most pressing issues.
The annual gathering will take place as central banks around the world continue to raise interest rates to tame persistent inflation and as a continuing debt crisis in emerging economies pushes debt burdens higher, preventing nations from growing.
Low-income countries are expected to suffer a double shock from high borrowing costs and a decline in demand for their exports, which could cause poverty and hunger to increase, Georgieva added.
“About 15 percent of low-income countries are already in debt distress an additional 45 percent are near it,” she added, calling on wealthier IMF members to do more to provide support.
The IMF head said persistently high interest rates, a series of bank failures in the US and Europe, and deepening geopolitical divisions are threatening global financial stability.
Georgieva said that countries have thus far been “resilient climbers” out of the coronavirus pandemic, which has killed almost 6.9 million people globally, disrupted global supply chains and exacerbated worldwide food insecurity.
However, there were still considerable concerns as advanced economies face the challenges of high inflation and poorer nations are burdened by debt, and the United States, the European Union and others are rethinking their trade relationships with China, adding to fears of instability.