IMF warns of global recession: Slow growth, high debt and rising inflation

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• The IMF warns of a challenging period with slow growth and rising debt burdens.
• Kristalina Georgieva emphasizes that current growth rates are not enough to generate tax revenues and financial investments.
• She warns that growth prospects in the medium term are still under control and that will not be enough to reduce global poverty.

IMF warning

According to Kristalina Georgieva, Director of the International Monetary Fund (IMF), the world’s economies are facing a difficult period characterized by slow growth and increasing debt burden.

Georgieva’s warning coincides with Chancellor Rachel Reeves’ preparations for her first budget, highlighting the urgent financial concerns of countries such as the United Kingdom. She emphasized that the current growth rates are not sufficient to generate the necessary tax revenue to pay existing debts and finance investments that are essential for the energy transition.

There is concern about inflation

Despite falling inflation rates, Georgieva emphasized that the high price levels that consumers are getting are here to stay. She recognized the hardship faced by families and individuals struggling with these ongoing pressures from inflation, especially in advanced economies where inflation has reached unprecedented levels.

Georgieva warned that medium-term growth prospects remain subdued. While not significantly below pre-pandemic levels, growth is still below what is needed to reduce global poverty, create enough jobs, or generate enough tax revenue generation for governments struggling with large debt obligations and the need for large investments, including green initiatives.

IMF annual meeting

Georgieva’s comments come ahead of the IMF’s annual meeting in Washington DC next week, which Reeves will attend as she finalizes budget measures expected to include a mix of tax increases, cuts regional and changes to lending rules to encourage investment in infrastructure.

Georgieva expressed at sky also her concern about the growing risk of trade conflicts further hampering the growth of the global economy. Her comments, which were clearly aimed at tensions between the US and China, highlighted the growing trend of major players using industrial and protectionist policies, creating a restrictive environment for international trade. She warned that this breakdown in global trade relations is tantamount to pouring cold water on an already sluggish global economy, significantly reducing the potential for growth.

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