The International Monetary Fund announced a warning about global economic growth for the next 5 years. It is going to be the weakest in more than three decades. The IMF warned nations to avoid economic fragmentation. Majorly, the fragmentations are due to political tensions. Thus, nations should take further steps to boost productivity. Meanwhile, the emergency lender foresees that the world economy would expand around 3%. This would be over the next half decade due to the rise of interest rates said Kristalina Georgieva, the Managing Director in a speech in Washington.
Based on the speech, it is the lowest medium-term growth forecast since 1990. Plus, it is less than the five-year average of 3.8% from the past two decades. She also added that for 2023, global gross domestic product will continue to rise by less than 3%. This would be the same with the IMF;s forecast which was 2.9%. As a result, around 90% of advanced economies would encounter challenging growth this year. It is due to the tightening monetary policy on demand. Thus economies in the U.S. and euro area would slow down in 5 years.
The IMF plans to launch a more detailed World Economic Outlook report based on the Spring Meetings. The World Bank participated in Spring Meetings as well. She argued that economic recovery remains elusive due to geopolitical tensions and high inflation. Therefore, it could harm many prospects, especially vulnerable people and countries. Many emerging markets in Asia show strength. However, low-income nations are having a challenging time to deal with weak exports. This is because their per-capita income growth is lower than those emerging markets.