The chief of the International Monetary Fund (IMF), Kristalina Georgieva, has warned that global economic activity is slowing, particularly in the manufacturing sector. Speaking at a meeting of G20 finance ministers and central bank governors, Georgieva acknowledged that the world economy has shown some resilience despite facing successive shocks in recent years and a rapid rise in interest rates. However, she emphasized that growth remains anemic by historical standards.
Georgieva highlighted the weakening manufacturing sector as a contributor to the slowdown in global economic activity. Looking ahead, she predicted a further decline in growth prospects, with advanced economies expected to experience a particularly pronounced slowdown. According to Georgieva’s projections, advanced economies’ growth is likely to slow from 2.7% in 2022 to just 1.3% by the end of 2023.
Additionally, Georgieva addressed the issue of inflation, stating that while there are signs of it slowing down, it still poses a significant obstacle to economic growth. Although there has been significant monetary policy tightening, she noted that headline inflation remains too high and core inflation remains sticky. Georgieva warned that inflation could persist at higher levels, necessitating further interest rate hikes. She also expressed concern that fragmentation could further dampen growth.
To address these challenges and put the global economy on a more vibrant medium-term path, Georgieva called for domestic and international policy measures focused on reducing inflation and managing finances responsibly. She highlighted that these efforts may vary from country to country and may require collective action, considering the persistent differences in nations’ economic conditions.
Georgieva also stressed the importance of strengthening the global financial safety net to protect vulnerable countries and their people. While advanced and strong emerging market economies have substantial international reserves, other countries rely on the pooled resources of international institutions such as the IMF. Georgieva urged global leaders to implement reforms that promote business growth and job creation, ensuring the well-being of all nations.
In conclusion, the IMF’s chief warns of a slowdown in global economic activity, especially in the manufacturing sector. She also emphasizes the persistent issue of inflation and the need for further monetary policy tightening. Georgieva calls for policy measures that reduce inflation, manage finances responsibly, and promote growth and job creation. Strengthening the global financial safety net is seen as crucial to protect vulnerable countries. Overall, Georgieva urges international cooperation and collective action to address these challenges and put the global economy on a more vibrant path.
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