IMFchief:2023 will be tougher with increased risk of recession

International Monetary Fund chief Kristalina Georgieva has said the world economy is facing multiple challenges at present like higher inflation, the tragedy of war that is giving commodity price shocks, and a cost-of-living crisis amid slowing growth. She wrote in a blog that as G20 ministers and central bank governors gather in Bali this week, they face a global economic outlook that has darkened significantly. Inflation is higher than expected and has broadened beyond food and energy prices, and this has prompted major central banks to announce further monetary tightening-which is necessary but will weigh on the recovery, the IMF chief added. It is going to be a tough 2022 and possibly an even tougher 2023, with an increased risk of recession, the IMF chief said.

Georgiva added: “Countries facing elevated debt levels will also need to tighten their fiscal policy. This will help reduce the burden of increasingly expensive borrowing and – at the same time – complement monetary efforts to tame inflation.” In the end, she highlighted the need for a more coordinated international action to avoid potential crises and boost growth and productivity. The European Central Bank is under pressure to raise interest rates to combat inflation and protect the euro, which this week slumped to parity with the US dollar for the first time in two decades.