15 November 2022

THE GATHERING GLOOM: International Economic Conditions are Getting Worse

 "We must not allow protectionism to take root and the world to drift into separate blocs."


 

1  We must not allow protectionism to take root--and the world to drift into separate blocs

We have calculated that a world divided would lose at least 1.5 percent of GDP annually. And the cost would be much higher--2 times higher or more--for open economies, those that depend on international cooperation.  


 

But we need not go that way. We can turn the tide and prevent sleepwalking into a world that is poorer and less secure.

2 Second, debt. This is challenging for everybody post-COVID. But for 25 percent of emerging market economies and 60 percent of low-income countries, it is crushing their ability to deal with food and energy insecurity. . .

3 Shocks will continue to hit us. But it is clear is that if we invest in climate-resilient agriculture and low-carbon development, we can have higher standards of living for people everywhere.. .We have US$40 billion today for the Resilience and Sustainability Trust, with four countries benefiting already. And we can do much more if you help us to do so.. ."

Georgieva has long warned against fragmentation of the world economy into blocs led by the United States and Western allies on one side, and China and other state-driven economies on the other, saying this would lead to differing technology and regulatory standards and increasing trade protectionism.


 

www.imf.orgs

IMF Managing Director Kristalina Georgieva Remarks at the G20 Leaders’ Summit

Bali, Indonesia
3 - 4 minutes

IMF Managing Director Kristalina Georgieva Remarks at the G20 Leaders Summit

November 15, 2022

As prepared for delivery

Congratulations to President Jokowi for bringing us together in this wonderful setting. 

We are discussing the issue of food and energy security at a particularly challenging time. 

Hopeful signs of recovery last year were replaced by an abrupt slowdown in the world economy because of COVID, the war in Ukraine, and climate disasters on all continents. This pushed prices up and led to a tightening of financial conditions. 


 

This is hard for everybody, but especially for emerging market and developing economies. They are experiencing, in many cases, high debt levels and depreciation of their currencies and, in this very difficult time, suffering even more from the high interest rates.

So what is the result of all this? We are seeing a reversal of all we had been fighting for: bringing poverty down, bringing hunger down. Now we have 345 million people that are suffering from a food crisis. 


 

And this is where the G20 can do so much to change the prospects for the world economy.

First, by allowing trade to do its job. Removing barriers, especially for food and fertilizers, can go a long way to counter the suffering of hundreds of millions of people. We must not allow protectionism to take root--and the world to drift into separate blocs.

We have calculated that a world divided would lose at least 1.5 percent of GDP annually. And the cost would be much higher--2 times higher or more--for open economies, those that depend on international cooperation. 

But we need not go that way. We can turn the tide and prevent sleepwalking into a world that is poorer and less secure.


Second, debt. This is challenging for everybody post-COVID. But for 25 percent of emerging market economies and 60 percent of low-income countries, it is crushing their ability to deal with food and energy insecurity. 

I am pleased that the G20's Common Framework for debt treatment is finally beginning to deliver—with Chad being the first country to complete an agreement with its official and private sector creditors. But we need to do much, much more.

Third, invest in resilience. Shocks will continue to hit us. But it is clear is that if we invest in climate-resilient agriculture and low-carbon development, we can have higher standards of living for people everywhere.

I want to take this opportunity to thank all those who have contributed SDRs so that the IMF can on-lend them to our member countries who need them most. We have US$40 billion today for the Resilience and Sustainability Trust, with four countries benefiting already. And we can do much more if you help us to do so.

The G20 has stepped up before during crisis situations. We look forward to the G20 stepping up again to help meet the difficult challenges facing the world now.

Thank you!  Terima kasih! 

IMF Communications Department
MEDIA RELATIONS

PRESS OFFICER: Ting Yan

Phone: +1 202 623-7100Email: MEDIA@IMF.org

@IMFSpokesperson

 
www.nytimes.com

I.M.F. Will Lower Global Outlook as Recession Risks Rise

Alan Rappeport
2 minutes

The head of the International Monetary Fund, Kristalina Georgieva, painted a dark picture of the global economy.

Video

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"The head of the International Monetary Fund said the organization would downgrade its global economic growth protections for the next year and warned that economic conditions could worsen.CreditCredit...J. Scott Applewhite/Associated Press

WASHINGTON — The head of International Monetary Fund warned on Thursday that recession risks across the globe were rising as a toxic mix of inflation, higher borrowing costs and lingering supply chain disruptions continued to batter the global economy.

✓ Kristalina Georgieva, the leader of the I.M.F., said that as a result of these persistent problems, the international body would downgrade its growth projections for next year in an upcoming report, one that she said would paint a dark picture of the looming economic threats. The assessment is the latest example of how last year’s optimism for a strong global recovery has been replaced by worries about rapid inflation, Russia’s war in Ukraine and an ongoing pandemic.

“Multiple shocks, among them a senseless war, changed the economic picture completely,” Ms. Georgieva, the I.M.F.’s managing director, said in remarks prepared for a speech at Georgetown University. “Far from being transitory, inflation has become more persistent.”

 
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