International Monetary Fund (IMF) Managing Director Kristalina Georgiva said India and China are expected to account for half of global growth in 2023. She added that the world economy will grow by less than 3 percent this year.
“Some momentum is coming from emerging economies. Asia in particular is a bright spot. India and China are expected to account for half of global growth in 2023. But others face a steeper climb,” Georgieva said.
She also warned that the sharp slowdown in the world economy last year caused by the COVID-19 pandemic and the Russian-Ukrainian war could continue this year as well. The Russia-Ukraine crisis has seen the global growth rate drop by almost half in 2022 from 6.1 percent to 3.4 percent, Georgieva added.
But how long will this slow growth phase last? The head of the IMF believes that the phase of slower economic activity will be extended, as the next five years will see growth of less than three percent. This is “our lowest medium-term growth forecast since 1990 and well below the 3.8 percent average over the past two decades,” according to the IMF chief.
Slower growth will make it harder for low-income countries to catch up, she added. She explained: “Poverty and hunger could continue to increase, a dangerous trend set in motion by the COVID crisis.”
Georgieva added that lower-income countries would be hamstrung by high borrowing costs at a time of declining demand for their exports. It also noted that around 90 percent of advanced economies will witness a decline in growth rates in 2023.
Speaking about the banking crisis, Georgieva said that while the global banking system had “come a long way” since the 2008 crisis, “there remain concerns about vulnerabilities that may be hidden not only in banks but also in non-banking institutions, now is not the time for complacency,” she said as she signed the contract.
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