International Monetary Fund (IMF) Managing Director Kristalina Georgieva warned on Thursday that the global economy, coupled with high debt, risks entering a prolonged period of low growth. This situation can leave governments with limited resources to meet the needs of their citizens and address long-term challenges such as climate change.
Speaking at a press conference at the annual meetings of the IMF and World Bank in Washington, Georgieva expressed concern about growing discontent among citizens around the world. He noted that although there is some resilience in the global economy, the mood regarding the economic outlook is not positive as high prices continue to cause hardship for households and global economic growth remains weak.
The IMF recently updated its economic forecasts, predicting that global GDP growth will decline slightly from 3.2% in 2024 to 3.1% by 2029. This forecast is significantly lower than the average growth rate of 3.8% from 2000 to 2019. , global public debt is expected to exceed $100 trillion for the first time this year, and the debt-to-GDP ratio is expected to reach 100% by 2030.
Georgieva underlined the seriousness of the economic situation, saying the current trajectory could result in lower incomes, fewer jobs and lower government revenues. That would leave less money available to support families and address challenges such as climate change.
In contrast, G20 finance ministers expressed optimism about a soft landing for the global economy and argued against protectionism. A joint statement by G20 finance ministers and central bank governors highlighted a positive outlook for a soft landing, despite recognizing some persistent challenges.
The G20 statement did not mention conflicts related to Russia’s invasion of Ukraine or military tensions between Israel and Palestinian militant groups such as Hamas and Hezbollah. Brazil, which holds the G20 Presidency, said there was disagreement among member states over whether such conflicts should be discussed within the group, but a He said discussions would continue at the level meeting.
Regarding China’s economic outlook, Georgieva warned that growth could slow significantly unless Beijing takes decisive steps to shift its economic model towards consumer demand. The IMF has revised down its 2024 growth forecast for China to 4.8%, and expects it to slow further in 2025.
IMF Chief Economist Pierre-Olivier Grinchat and US Treasury Secretary Janet Yellen said they had yet to see any efforts by the Chinese government to significantly boost China’s domestic demand.
The IMF and World Bank meeting was also overshadowed by concerns about the escalating conflict in the Middle East, which began with Hamas’s surprise attack on Israel a year ago. Georgieva noted that the escalation could have economic implications for the region, including Egypt, which has recently seen an increase in its IMF loan program.
Georgieva announced plans to visit Egypt in the next 10 days to examine the economic situation and possibly adjust the country’s financial plans, as revenues from the Suez Canal have significantly decreased. Jihad Azour, director of the IMF’s Middle East and Central Asia department, said the scale of Egypt’s program remains appropriate, but Georgieva will assess the effectiveness of the country’s social protection programs in the current economic climate.
Reuters contributed to this article.
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