Georgieva: "The world economy is like a ship in troubled waters. We need adequate answers"

"Our world economy is like a ship in troubled waters," said Kristalina Georgieva, director of the International Monetary Fund, in her speech at Georgetown University in Washington.

"In less than three years we have experienced shock, after shock, after shock. First Covid. Then the Russian invasion of Ukraine and again the climate disasters on all continents. These shocks have inflicted immeasurable damage on people's lives" Georgieva said, adding that "their combined impact is driving a global price surge, particularly on food and energy, causing a cost of living crisis," while geopolitical fragmentation makes it difficult to respond adequately.

Among the actions that must be taken to stabilize the global economy is that of "staying on course to reduce inflation".

So Kristalina Georgieva, at the Annual Meeting Curtain Raiser at Georgetown University.

"At this juncture the cost of a misstep can be enormous," she remarks.

"Insufficient tightening would cause inflation to become un-anchored and entrenched, which would require much higher and sustained future interest rates, causing enormous damage to growth and massive harm to people. On the other hand, tightening monetary policy too much and too much. too fast, and doing so in a synchronized manner across countries could push many economies into a prolonged recession. "

In our World Economic Outlook updated next week "we will report that recession risks are on the rise. We estimate that countries that account for about one third of the world economy will experience at least two consecutive quarters of contraction in this or next year. when growth is positive, it will be felt by thousands of people as a recession due to shrinking real incomes and rising prices. " 

"We have already cut our growth estimates three times, to just 3.2 percent for 2022 and 2.9 percent for 2023. And as you will see in our updated World Economic Outlook next week, we will cut the growth forecast. for the next year".

"It is urgent to stabilize the economy, given the deteriorating global outlook."

"We are experiencing a fundamental change in the global economy: from a world of relative predictability, with international economic cooperation, low interest rates and low inflation, to a more fragile world with greater uncertainty, greater economic volatility, geopolitical clashes. and more frequent and devastating climatic disasters, a world in which any country can be led off course more easily and more often ".