International Monetary Fund Managing Director Kristalina Georgieva announced on Thursday that global economic growth is in danger of experiencing the lowest medium-term growth since 1990. With the IMF/World Bank meetings scheduled for next week, the IMF director stated that global growth is set to expand by less than 3% this year.
According to Georgieva, rising geopolitical tension and persistent inflation are threatening the ability of the global growth rate to rise. Currently, growth remains well below the average 3.8% growth that has been experienced over the past two decades.
Georgieva sees emerging economies such as India and China as the strongest performers going forward, while she expects approximately 90% of advanced economies to experience a decline in growth over the course of the year.
Following the collapse of Silicon Valley Bank in the U.S. and Credit Suisse, Georgieva has called on central banks to “address financial stability risks when they emerge through appropriate provision of liquidity.”
“The key is to carefully monitor risks in banks and non-bank financial institutions, as well as weaknesses in sectors such as commercial real estate,” the IMF director recommended. She does believe, however, that further interest rate hikes are needed to beat down persisting inflation.