The International Monetary Fund (IMF) is slightly more optimistic about the development of the world economy. The upcoming new forecasts in the coming week will show that there could be slightly more growth overall, IMF chief Kristalina Georgieva said in Washington on Thursday. She referred to the robust economy in the US, but also in many emerging countries. Consumption and investment would be supportive and supply chain problems would diminish.
“And inflation is falling, a little faster than previously thought,” Georgieva said. You can breathe a sigh of relief. “We have avoided a global recession and also a period of stagflation.”
In the long term, values remain weak
Next week, the IMF plans to present new economic forecasts for the global economy and individual countries at its spring meeting in the US capital. At the end of January, global economic growth of 3.1 percent was forecast for this year. In 2025 this will probably be 3.2 percent. In a long-term comparison, these are weak values.
“There are a lot of things to worry about”
“But there are still many things that cause concern,” Georgieva said. The Bulgarian referred, among other things, to geopolitical conflicts. The world is experiencing increasingly frequent shocks and a high degree of uncertainty. The medium-term prospects are only a relatively weak figure of just over three percent growth per year. Without countermeasures to increase productivity, there is a risk of a disappointing decade.
According to the IMF, controlling inflation must remain a priority. The trend should continue in this direction in 2024. This could give major industrialized countries the opportunity to cut interest rates again in the second half of the year. They had been increased significantly to combat the long-standing high rate of inflation. The central banks are in a difficult situation. Cutting interest rates too early could cause inflation to return; waiting too long can bring the economy to a standstill.
The IMF recommends creating buffers
After years of rapidly rising debts, Georgieva recommended creating buffers in households again. “The deficits in most countries are simply too high.” Current interest rates have made it significantly more difficult to pay off debt. This hits poor developing countries particularly hard. On average, their interest payments would amount to about 14 percent of government revenues. That is about twice as much as fifteen years ago.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
