Risk of global recession increased, says IMF director general

The Director General of the International Monetary Fund (IMF), Kristalina Georgieva, warned this Monday () that the risk of a global recession has increased and that the world has now entered an era of “fragility and volatility”.

“We estimate that about a third of the world economy will experience at least two consecutive quarters of negative growth this year or next and that the total amount that will be lost with the global economic slowdown will reach US$ 4 trillion (the equivalent of BRL 20,75 trillion) between now and 2026”, she said.

Georgieva made the remarks in a lecture, in which World Bank (WB) President David Malpass also participated, marking the beginning of the Annual Meetings of 2022 of the two institutions, in Washington, where the main economic leaders will discuss the global economic perspectives.

These are the first face-to-face meetings in three years between the leaders of the two institutions, l Embred Georgieva, who also said that the hiatus was marked by “unthinkable events that are having major consequences”: the pandemic, Russia’s invasion of Ukraine and climate disasters on all continents.

” All this has put people in a very difficult place. They are exhausted and facing a cost-of-living crisis,” said the head of the IMF, noting that the situation “is especially difficult for developing countries”.

In turn, Malpass explained that debt levels of developing countries “are becoming increasingly onerous” and that rising interest rates increase the severity of the situation, as do high inflation rates.

With more 70 millions of poor people, according to the WB’s latest analysis, and a 4% reduction in average income, “our goal of shared prosperity is not happening” and “reversals of development”, he added.

During the meeting, according to Georgieva, the main world leaders will discuss what can be done to face the complex scenario. According to her, one of the most important factors is that monetary and fiscal policies go hand in hand.

“The joint confrontation of monetary and financial policies fiscal policy this year is absolutely paramount”, said the managing director of the IMF, who warned that “it will not be good” if monetary policies “step on the brakes” while fiscal policies “step on the accelerator”.

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