The global economic outlook remains extremely uncertain, International Monetary Fund chief Kristalina Georgieva said on Wednesday, warning that a further disruption in natural gas supplies to Europe could plunge many economies into recession.
In a blog published ahead of this week’s meeting of finance officials from the Group of 20 Largest Economies, the IMF’s managing director said that Russia’s war in Ukraine has significantly affected the economic outlook, and that the IMF is about to downgrade its outlook. for 2022 and 2023.
Georgieva told Reuters last week that the Fund will cut its previous forecast of 3.6% growth in 2022 for the third time this year and said it could not rule out a recession next year.
New figures will be released later this month, following a downward revision of nearly one percentage point in April.
Georgieva said the war is compounding the human tragedy while commodity-related shocks are slowing growth and pushing up prices, exacerbating a cost-of-living crisis that threatens to push 71 million more people into extreme poverty.
“Countries need to do everything in their power to reduce high inflation … because persistently high inflation can scuttle the recovery and further harm living standards, particularly for the vulnerable,” she said, adding that growing concerns with the provision of food and energy also raise the risks of social instability.
To prevent further hunger, malnutrition and immigration, richer countries should provide urgent support to those in need through new bilateral and multilateral financing, as well as reversing recent restrictions on food exports, Georgieva said.
Most central banks would need to continue to tighten monetary policy decisively, especially in countries where inflation expectations were starting to weaken.
Without action, she said, these countries could face a “destructive wage-price spiral” that would require more vigorous monetary tightening, with even greater damage to growth and employment.
Source: CNN Brasil
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