WASHINGTON: The World Bank (WB) and International Monetary Fund’s (IMF) spring meetings started this week with an ambitious reform and fundraising agenda expectedly to be overshadowed by concerns over rising geopolitical tension, high inflation, and financial stability.
Kristalina Georgieva, IMF Managing Director, told a press briefing on Monday that despite the remarkable resilience of consumer spending in the US and Europe, uplift from China’s reopening, the global growth would remain below 3%” in 2023.
IMF expectations
The IMF now expects global growth to remain at nearly 35 for the next half-decade, which is its lowest medium-term prediction since the 1990s.
Georgieva said last week that around 90% of the world’s advanced economies would experience slowing growth this year, while the emerging markets in Asia are likely to see a substantial increase in the economic output — with China and India predicted to account for half of all growth.
Low-income nations will likely suffer a double shock from higher borrowing costs and a decline in export demand, which Georgieva said could fuel hunger and poverty.
IMF’s projections
The latest growth projections published in the Fund’s World Economic Outlook on Tuesday would provide a broader look at how different nations are coping, with additional publications to detail financial challenges to the world economy.
The WB, which forecast a gloomier financial picture than the fund earlier this year, is slightly spiking its prediction for global growth this year, from 1.7% in January to 2%, spurred by China’s financial reopening, the bank’s president David Malpass said at a press briefing on Monday.
This year’s meeting will be held amid high inflation rates and ongoing concerns about the condition of the banking sector following the surprising collapse of Silicon Valley Bank.
Georgieva suggested last week that central banks should continue fighting high inflation through interest-rate increases, despite concerns that it could further damage the banking sector.
In an interview with AFP, she said that at this point, “We do not envisage central banks stepping back from fighting inflation.”
She said that central banks still have to prioritize tackling inflation and supporting financial stability through various instruments.
WB, IMF’s call for wealthier nations
Ahead of the spring meetings, the Fund and World Bank also called on wealthier states to help plug a 1.6-billion dollars hole in a concessional lending facility for low-income nations that was heavily used during the Covid-19 pandemic.
Many low-income nations are now facing increasing debt burdens due to the higher interest-rate conditions, which is also causing capital outflows from many nations most in need of investment.
