2024-04-22 16:01:44
Global economic growth will fall by more than one percentage point by the end of the decade compared to pre-pandemic levels; If action is not taken, the global economy risks sliding into the “Cool 20s.” IMF Managing Director Kristallina Georgieva warned about this.
As Day.Az reports with reference to RBC, the Financial Times reports this.
The fund’s medium-term forecasts for global financial stability, which estimate five-year growth prospects, are the lowest in decades. These expectations come against a backdrop of low labor productivity, slowing globalization and frequent geopolitical upheaval.
The combination of these reasons will reduce economic growth to negligible levels and become the root cause of “popular discontent” with financial policies, Georgieva warned. In her opinion, the impact of this factor will be especially strong in a number of the world’s poorest countries, which may lag even further behind other economies. This trend and ways to reverse it are “what I think about when I wake up in the middle of the night,” the head of the IMF admitted.
The IMF’s pessimistic expectations are based on the fact that the period of low interest rates that followed the global crisis in 2008 led to the misallocation of capital, which prevented investment in more promising areas of activity and the retention of underperforming companies in the market. Weak investment has contributed to slow productivity growth in several large economies, especially in the European Union. Officials fear that countries, especially those with aging populations and limited budgets, will have a hard time breaking this trend, the FT notes.
Former Federal Reserve Chairman Donald Cohn noted that in past decades, “there have been a number of positive shocks,” such as the fall of the Iron Curtain, the integration of Eastern Europe into the European Union and China’s accession to the WTO; however, now there are no more such positive changes, instead the world economy is facing shocks such as pandemic and wars. “This is clearly bad news for the global economy,” he admitted.
Subscribe to our WhatsApp channel and stay up to date with the main news!