IMF, WB see rising risks of global recessions

World Bank (WB) President David Malpass and International Monetary Fund (IMF) Managing Director Kristalina Georgieva yesterday warned of a growing risk of global recession and said inflation remained a continuing problem after Russia’s invasion of Ukraine.

“There’s a risk and real danger of a world recession next year,” Malpass said in a dialogue with Georgieva at the start of the first in-person meetings of the two institutions since the COVID-19 pandemic, Reuters reported. 
He cited slowing growth in advanced economies and currency depreciation in many developing countries as well as ongoing inflation concerns.

The IMF chief last week said the global lender would downgrade its forecast for 2.9 percent global growth in 2023 when it releases its World Economic Outlook today (Tuesday), citing the shocks caused by the COVID-19 pandemic, Russia’s invasion of Ukraine and climate disasters on all continents.

Georgieva noted that economic activity is slowing down in all three major economies - Europe, which has been hit hard by high natural gas prices, China, where housing volatility and COVID-19 disruptions are dragging down growth and the United States, where interest rate hikes “are starting to bite”. Slowing growth in advanced economies, rising interest rates, climate risks and continuing high food and energy prices are hitting developing countries particularly hard, both leaders said, calling for concerted action to help emerging markets. Georgieva also said the IMF will be advocating this week for central banks to continue their efforts to contain inflation, despite the negative impact on growth. If they don’t do enough, she said, “We are in trouble. ... We cannot afford inflation to be a runaway train.”