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IMF head expects less than 3% global economic growth in 2023

Published:Thursday | April 6, 2023 | 12:35 PM
In this image taken from video, Managing Director of the International Monetary Fund Kristalina Georgieva speaks at the opening ceremony of the Boao Forum for Asia in Boao in southern China's Hainan Province, March 30, 2023. The International Monetary Fund chief is warning the world economy is expected to grow less than 3% in 2023, down from 3.4% last year, increasing the risk of hunger and poverty globally. Georgieva said Thursday growth is expected to remain around 3% for the next five years, calling it “our lowest medium-term growth forecast since 1990." (AP Photo/Dake Kang, File)

WASHINGTON (AP) — The International Monetary Fund chief said Thursday the world economy is expected to grow less than 3% this year, down from 3.4% last year, increasing the risk of hunger and poverty globally.

Kristalina Georgieva said the period of slower economic activity will be prolonged, with the next five years of growth remaining around 3%, calling it “our lowest medium-term growth forecast since 1990, and well below the average of 3.8% from the past two decades.”

Georgieva said slower growth would be a “severe blow,” making it even harder for low-income nations to catch up.

“Poverty and hunger could further increase, a dangerous trend that was started by the COVID crisis,” she said.

Georgieva's comments at a Politico event at the Meridian International Center come ahead of next week's spring meetings of the IMF and its sister lending agency, the World Bank, in Washington, where policymakers will convene to discuss the global economy's most pressing issues.

The annual gathering will take place as central banks around the world continue to raise interest rates to tame persistent inflation and as an ongoing debt crisis in emerging economies pushes debt burdens higher, preventing nations from developing.

Roughly 15% of low-income countries are already in debt distress, and another 45% face high debt vulnerabilities, according to the IMF.

Georgieva said high interest rates, a series of bank failures in the US and Europe, and deepening geopolitical divisions are threatening global financial stability.

Given the economic projections, non-governmental organizations are calling for the IMF to allocate more funds to low-income countries through Special Drawing Rights, which are an IMF international reserve asset that can be exchanged for hard currency.

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