IMF chief Kristalina Georgieva has warned that the chance of global growth dropping below 2% – last seen during the coronavirus outbreak and the global financial crisis of 2009 – is increasing as major economies slow.
Her comments come as the world’s biggest economies grapple with fallout from Russia’s invasion of Ukraine, which sent food and energy prices soaring, along with a surging inflation and a slowdown in China.
“The probability of growth slowing even further, falling below two percent was one-in-four,” said Ms Georgieva at the Reuters NEXT conference, referring to the fund’s recent expectations for 2023.
“When we look at the most recent indicators, we are concerned that this probability may be going a bit further up,” she added.
The International Monetary Fund expects more than a third of the global economy to shrink this year or next, with the United States, European Union and China stalling.
It is also concerned about a “simultaneous slowdown in the US, in Europe and in China,” said Ms Georgieva, adding that slowing growth in China is particularly significant.
This is worrying given that the world has relied on China for a boost, with “some 35, 40% of global growth” coming from expansion in the world’s biggest second economy.
“This is not the case now, it’s not going to be the case next year,” she said.
The IMF is set to give an update on its economic outlook in January, and it is among key global institutions to visit China next week for talks.
According to World Bank figures, the global economy slumped 3.3% in 2020 and 1.3 percent in 2009.