IMF chief sees higher chance of global growth below 2pc in 2023

Friday, Dec 02, 2022

By News Desk

NEW YORK: International Monetary Fund Managing Director Kristalina Georgieva said on Thursday the chance of global growth falling below 2 percent next year was increasing due to continued effects of the war in Ukraine and simultaneous slowdowns in Europe, China and the United States.

Georgieva told the Reuters NEXT conference that she was particularly concerned about the slowdown in China because the world's second-largest economy has been a strong engine of global growth.

The IMF will update its economic outlook in January and the picture "has darkened recently on the basis of what we see in consumer sentiment, in investor sentiment," she said. The IMF in October cut its global growth forecast for 2023 to 2.7 percent, compared to a 2.9 percent forecast in July, amid colliding pressures from the war in Ukraine, high energy and food prices, inflation and sharply higher interest rates, warning that conditions could worsen significantly next year.

At the time, the IMF put a 25% probability of global growth falling below 2% next year - a phenomenon that has occurred only five times since 1970 - and said there was a more than 10% chance of a global GDP contraction.

"We are concerned that this probability may be going a bit further up," Georgieva said on Thursday, citing the impact of Russia's "senseless war" in Ukraine on the economy of Europe, and the simultaneous slowdowns in the United States, Europe and China. The IMF chief said ongoing Russian attacks on Ukrainian civilian infrastructure have increased the cost to keep Ukraine's economy going next year, adding up to $1 billion a month to previous estimates of $3-$4 billion.

Georgieva said she was confident that the European Union, United States and other international partners would continue to provide needed support for Ukraine.

She said the IMF had provided $2.7 billion in emergency financing to Ukraine, and had just agreed a board monitoring program with Ukraine that would pave the way for a formal financing program.

Georgieva said she will travel to Beijing next week with heads of other international institutions to discuss China's economic outlook and COVID-19 policies with the country's leadership "This is the first time, hopefully, we will be able to sit together and discuss the very pressing issues that China, and the world are faced with."