The International Monetary Fund Managing Director has warned that the global economy is at increasing risk of recession and it could lose $4 trillion in output through 2026, a "massive setback” roughly equivalent to the size of Germany's economy.
The situation is "more likely to get worse than to get better," Kristalina Georgieva said in prepared remarks for an IMF event Thursday in Washington. IMF Chief cited uncertainty that remains "extremely high” after Russia's military campaign in Ukraine and the pandemic, and warned that "there could be even more economic shocks.”
The head of the lender of last resort spoke ahead of its annual meetings next week, when finance ministers and central bankers will converge in the U.S. capital to seek solutions for global challenges such as persistent inflation, record debt that emerging developing nations are struggling to service, climate change and food security.
The IMF estimates countries accounting for about a third of the global economy will experience at least two consecutive quarters of contraction this or next year, Georgieva said.
She added that: "Even when growth is positive, it will feel like a recession because of shrinking real incomes and rising prices.”
The IMF currently projects global economic growth of just 3.2 percent in 2022 and 2.9 percent in 2023. Georgieva said the latter estimate will be lowered next week.
Georgieva called on policymakers to "stay the course" to bring down inflation as a means of stabilizing economies.
"As painful as that may be this is the right thing to do. Even if the economy slows down as a result," she said.
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