IMF Chief Warns of Weakest Growth Prospects in Decades

Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), expressed significant concern on Friday about the world’s weakest medium-term growth prospects in decades, projecting global growth at just over 3%.

Georgieva highlighted several interrelated challenges impeding economic progress, including high debt levels, economic fragmentation, and the complexities involved in navigating digital and green transitions. She warned that a low growth environment could lead to even greater inequality.

“A low growth world is likely to be an even more unequal world,” Georgieva stated at the conclusion of the Third Meeting of the G20 Finance Ministers and Central Bank Governors in Brazil. She stressed the importance of avoiding economic stagnation, which could result in a more unstable and unequal global landscape.

To counter these risks, Georgieva urged for efforts to lay a strong foundation for growth and job creation. This includes implementing sound fiscal and monetary policies, fostering a stable and inclusive financial system, promoting progressive taxation, and increasing support for vulnerable nations.

New IMF analysis indicates that prolonged periods of economic stagnation—lasting four years or more—can increase income inequality within countries by nearly 20 percent. Georgieva emphasized that this issue is both a moral and economic concern, as an unequal world could struggle to adapt to ongoing transformative changes.

Despite a decline in inflation across many countries, Georgieva advised central banks to be cautious with monetary policy adjustments. She recommended resisting early easing of policies when inflationary pressures persist, while also avoiding delays that could harm economic activity.

Looking ahead, the IMF projects global economic growth to reach 3.2% in 2024 and 3.3% in 2025. Georgieva’s remarks underscore the need for comprehensive global strategies to address these economic challenges and foster a more stable and equitable world.