By Andrea Shalal and David Lauder
WASHINGTON (Reuters) – World Bank President David Malpass and International Monetary Fund Managing Director Kristalina Georgieva warned on Monday of the growing risk of a global recession and said inflation remained an ongoing problem after Russia’s invasion of Ukraine.
“There is a real danger and danger of a global recession next year,” Malpass said in an interview with Georgieva at the start of the two institutions’ first in-person meetings since the COVID-19 pandemic.
He cited slowing growth in advanced economies and currency depreciation in many developing countries, as well as persistent inflation concerns.
The head of the International Monetary Fund said last week that the World Bank will cut its forecast for global growth by 2.9% in 2023 when it releases its World Economic Outlook on Tuesday, citing shocks from the COVID-19 pandemic, Russia’s invasion of Ukraine and all-time climate disasters. continents.
On Monday, she noted that economic activity is slowing in all three major economies — Europe, which has been hit hard by rising prices, China, where housing volatility and COVID-19 disruptions are stifling growth, and the United States, where interest rates are going. The price hike “began to pay off”.
The two leaders said slowing growth in advanced economies, rising interest rates, climate risks, and persistently high food and energy prices are hurting developing countries in particular, and called for concerted action to help emerging markets.
Georgieva, the first managing director of the International Monetary Fund from an emerging market economy, said advanced economies need to “control the huge and frightening risk of the debt crisis” because it will affect all countries, not just those with high debt burdens.
“It’s not the rosy picture. But if we cooperate, if we work together, we can reduce the pain that lies ahead in 2023.”
Georgieva said the IMF will this week call on central banks to continue their efforts to contain inflation, despite the negative impact on growth.
If they don’t do enough, she said, “we’re in trouble…we can’t afford inflation to be a runaway train.”
Fiscal measures should be “well-targeted” to ensure that no more “fuel for the inflationary fires” is added.
Malpass, who was criticized last month for refusing to say whether he accepts the scientific consensus on global warming, said bank officials are working hard to free up more money to tackle the climate problems facing many developing countries.
Georgieva said the world needed a staggering $3-6 trillion to tackle climate change, and it was necessary to increase cooperation with the private sector and tap the money “on a large scale” to help meet the needs.