International Monetary Fund Director Kristalina Georgieva warned that the global economy is facing the risk of falling into a path of low economic growth and high debt, which places governments before major challenges related to providing the necessary resources to improve the opportunities of their people and confront climate change and other challenges.
This came during a press conference held by Georgieva within the framework of the annual meetings of the International Monetary Fund and the World Bank in Washington, and she stressed that these circumstances increase the state of dissatisfaction among people around the world.
Georgieva indicated that the meeting comes at a critical time, The upcoming US presidential elections on November 5 loom over the discussions, amid expectations that the return of the former president will lead to… Donald Trump To the White House to trade policies Protectionism New and increase in US debt by billions of dollars.
However, Georgieva stressed that the state of dissatisfaction is not limited to the United States alone, noting that the global economy has shown some flexibility in the face of challenges resulting from wars, weak demand in China, and the late repercussions of tight monetary policies.
In the context of her talk about attempts to tame high inflation without entering into a painful recession or widespread job loss, Georgieva said, “For most of the world, a soft landing appears to be on the horizon, but people do not feel satisfied with the economic future.”
She added, “Economies may be good, but people are still suffering from high prices and weak global growth.”
According to International Monetary Fund forecasts issued last Tuesday, global GDP growth will gradually decline by 2029 to reach 3.1% from 3.2% this year, which is much lower than the average recorded during the period from 2019-2020 of 3.8%, with a decline The strength of the American economy.
The meetings also witnessed growing concerns about the escalation of the war in the Middle East, as Georgieva expressed her concern that this escalation would exacerbate the negative economic effects on the countries of the region, including Egypt, which reached an agreement with the IMF to increase the loan program provided to it by 3 Billions to $8 billion earlier this year.
“This includes risks of escalation in regional conflicts, especially in the Middle East, which could place a significant burden on energy markets, but there is also a clear shift in terms of industrial policy and trade flows that could lead to… To lower expectations.
Other risks include the repercussions of “a decline in the number of immigrants in advanced economies, which may affect labor markets and inflation, as well as a sudden tightening in global financial conditions” if central banks do not quickly enough address the slowdown in inflation in their monetary policies.
Positive indicators
But the indicators are not all negative. The International Monetary Fund believes that the decline in inflation to the specified target of 2% in the major economies constitutes a positive result that came about thanks to the efforts of central banks.
Gurrinsha stressed that “the progress recorded on the inflation front was greater in developed economies that are close to their target compared to emerging or developing markets, as we observed a greater discrepancy on the inflation front.”
The IMF believed that some countries are succeeding in this better than others, led by the United States, which will end the year with growth of 2.8%, with the rate declining slightly in 2025 to 2.2%, i.e. more than previously expected.
The Fund expects the Eurozone to continue to record slow growth, with a slight improvement expected in 2025, at around 1.2%, compared to 0.8% in 2024.
The main reason for this is due to the largest economy in this region, namely Germany, whose growth rate will be non-existent in 2024 after a slight recession last year, and will return to record weak growth in GDP of 0.8% in 2025.
Unlike Germany, the situation in France remains remarkably stable, with growth expected at 1.1% in 2024 and 2025, similar to 2023, according to the Fund.
Spain remains the new engine of the Eurozone, with an expected growth rate of 2.9% this year and 2% in 2025.
Among emerging countries, the situation will remain uneven, with China continuing to record signs of slowdown, and India, although it is heading in the same direction, will record the most sustainable growth among the major economies.
As for Russia, military expenditures support the economy, which is still suffering from the repercussions of Western sanctions. The Russian economy will record a growth of 3.6% in the current year, but it will slow significantly to 1.3% in 2025.
