IMF Chief Warns of Sub-3% Global Economic Growth Amid Geopolitical Tensions

Posted on May 06, 2023 at 05:05 PM

The International Monetary Fund (IMF) chief Kristalina Georgieva warned that global economic growth has declined from 3.4% last year to less than 3%, increasing the risk of hunger and poverty worldwide.

Speaking at a Politico event on Thursday, she noted that the COVID-19 crisis had initiated a dangerous trend that could further exacerbate poverty and hunger. The IMF also reported that approximately 15% of low-income countries are currently in debt and 45% face high debts.

Despite acknowledging that governments have shown resilience in the front of disrupted global trade and food supply, Ms Georgieva stated that the path ahead, especially regarding returning to robust growth, is unclear and challenging.

Following the IMF's economic projections, over 50 non-governmental organisations and labour unions are urging more outstanding funds to be allocated to low-income countries via an international reserve asset called Special Drawing Rights (SDRs).

The allocated funds through the Special Drawing Rights could be utilised to provide food, medicine and help countries avoid economic crises. The report indicates that governments are experiencing varying degrees of risk of recession.

While India and China are considered to be in a favourable position and are projected to contribute to half of the global growth in 2023, developed countries such as the US and those in the EU are facing high inflation rates due to the need to reassess trade relationships with China.