The world economy shows remarkable resilience.

In a speech prepared for the annual meeting of the International Monetary Fund (IMF) and the World Bank (WB) next week in Morocco, IMF Managing Director Kristalina Georgieva said that the global economy has an increased chance of escaping recession, but there are still many fiscal and financial risks for countries.

Tổng Giám đốc IMF: Kinh tế thế giới thể hiện khả năng phục hồi đáng nể

The world economic outlook is brighter. (Source: Visual Capitalist)

The global economy has shown remarkable resilience, and the first half of 2023 has brought some good news, largely due to stronger-than-expected demand for services and clear progress in the fight against inflation, Kristalina Georgieva said . This increases the chances of a soft landing for the global economy, but countries cannot let their guard down.

“The cumulative shocks since 2020 have cost the global economy $3.7 trillion,” she said. “Global growth remains well below the 3.8% recorded before the pandemic, and medium-term growth prospects have weakened further. Inflation in some countries is also likely to exceed targets by 2025.”

Therefore, fighting inflation should be the number one priority of countries. Rising prices will undermine consumer and investor confidence and will hit the poorest groups in society the hardest."

Managing Director Kristalina Georgieva pointed out that winning the fight against inflation requires countries to keep interest rates higher for longer. It is important not to loosen policy too soon to avoid the risk of a return to hyperinflation.

The IMF chief also warned that global economic fragmentation – manifested through protectionism, export controls and a retreat from global trade – threatened to further weaken growth prospects, especially for emerging and developing economies.

Many countries also face significant financial risks and need to urgently rebuild their “buffers,” with debt burdens in Africa and other regions growing.

Banks are also facing pressure, she said, calling for urgent steps to strengthen the global financial safety net.

IMF analysis found that 100 low-income and emerging market countries – including most African nations – lack sufficient resources and access to currency swap schemes, leaving them at risk in the event of a financial crisis.

The IMF chief's cautious message comes just days before finance ministers and central bank governors from 190 countries gather in Marrakech, Morocco, to discuss risks facing the global economy.

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