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IMF: People’s incomes are down and prices are up. Inflation is an imminent danger

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The war in Ukraine has prompted the International Monetary Fund to lower its forecasts for the advance of the world economy, both for 2022 and 2023, as higher food and energy prices put pressure on fragile economies, the IMF’s chief executive said on Thursday. Kristalina Georgieva, reports Reuters.

Speaking at the preview of next week’s IMF and World Bank spring meetings, Kristalina Georgieva said the fund will revise downward estimates for 143 economies, which together account for 86 percent of world GDP. but added that for most countries the IMF is still counting on positive economic growth.

Georgieva stressed that Russia’s invasion of Ukraine “sends shockwaves around the world” and is causing difficulties for countries that were already struggling to recover from the COVID-19 pandemic. “In simple terms, we are facing a crisis after crisis,” Georgieva said in a speech at the Carnegie Endowment Center for International Peace in Washington. “In economic terms, growth is down and inflation is up. In human terms, people’s incomes are declining and weights are increasing,” Georgieva added.

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The IMF, which is due to release its new economic forecasts on Tuesday, believes that inflation is now “an imminent danger” for many economies, and will remain high for a longer period than previously expected.

Georgieva did not give a concrete figure on the advance of the world economy on Thursday, but previously said that it will be lower than the forecast of 4.4% advanced by the IMF in January, a figure that has already been reduced by half a point. percentage due to disruptions along supply chains.

“Meanwhile, the outlook has deteriorated substantially, largely due to the war and its repercussions,” Georgieva said. “Inflation, tightening of financing conditions and frequent and large-scale quarantines in China are also affecting economic activity,” he added.

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Kristalina Georgieva also drew attention to the fragmentation of the world economy into large geopolitical blocs, with different trade and technological standards, payment systems and reserve currencies. Such fragmentation is the biggest threat to the post-World War II economic order, which has been ruled by the International Monetary Fund, the World Bank and other institutions set up to end the conflict. “Such a tectonic transformation would cause painful aid costs. The supply, research and development chains as well as the production networks will be broken and will have to be rebuilt,” he said.

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