IMF Announces Downward Revision of Global Growth Forecast Due to Rising Risks | national
WASHINGTON (AP) – The head of the International Monetary Fund said the agency was lowering its forecast for global growth this year.
IMF Managing Director Kristalina Georgieva on Tuesday cited growing risks of inflation, debt and a divergence in growth prospects between countries with access to coronavirus vaccines and those in need of vaccines.
In remarks prepared for an academic hearing in Italy, Georgieva said the goal of next week’s annual meetings of the IMF of 190 countries and its sister lending agency, the World Bank, will be to address the growing risks in a way. coordinated to improve the outlook for the global economy.
She noted that the IMF’s World Economic Outlook in July predicted a strong global rebound of 6%, which would have been a dramatic rebound from a 3.2% contraction in the pandemic year of 2020.
But now, she said, IMF forecasters are a little less optimistic following the surge in cases of delta variants over the summer in many parts of the world and higher than inflation. forecast exacerbated by problems with global supply chains.
“The risks and obstacles to a balanced global recovery have become even more pronounced,” Georgieva said in a scheduled virtual appearance at Bocconi University in Milan. She said specific results of the lowered outlook would be released by the IMF next Tuesday.
She said there is a risk that higher than expected inflation will push central banks to raise interest rates and depress growth even further. Of particular concern is rising food prices, she said, with global prices rising 30% in the past year, while higher energy prices are also putting pressure on consumers. families.
“The United States and China remain key engines of growth even though their momentum is now slowing,” Georgieva said, adding that a few other advanced and emerging economies were also gaining momentum, pointing to Italy and ‘other European countries.
“In contrast, in many other countries growth continues to worsen, hampered by poor access to vaccines and limited policy responses,” she said.
She said it was still possible to meet the targets set by the IMF and other global institutions of immunizing at least 40% of the people in each country by the end of this year, and reaching 70%. by the first half of 2022.
Georgieva called on rich countries to keep their pledges of support and also close a $ 20 billion gap in funding for testing, tracing and treatment.
“If we don’t do this, large parts of the world will not be vaccinated and the human tragedy will continue,” she said. “It would delay the recovery. We would see global GDP losses reach $ 5.3 trillion over the next five years. “
To meet the challenge, Georgieva said the IMF provided $ 118 billion in new financing to 87 countries and approved a $ 650 billion increase in the agency’s special drawing rights, the largest in history.
These resources are intended to stimulate cash-strapped countries. About $ 275 billion of the allocation went to developing countries. She called on rich nations to channel more of these resources to poorer nations.
In addition to stepping up the fight against the coronavirus in poor countries, next week’s IMF and World Bank meetings will also discuss efforts to provide more support to tackle climate change.
However, Georgieva is also likely to face questions regarding a recent critical report from an external law firm that while she was a senior World Bank official, she and other Bank officials. global pressure on other World Bank employees to change the ranking of companies in China and other nations.
The results prompted the World Bank to cancel the annual report and sparked calls for Georgieva’s resignation. Critics have argued for some time that China exerts undue influence over the IMF, World Bank and other global financial institutions. Georgieva has denied any wrongdoing and said she looks forward to meeting with the IMF board to clear her name.