The Director-General of the International Monetary Fund (IMF) Kristalina Georgieva warned that the “Horizon has Darkened” for the global economy, during a seminar in Davos, Switzerland, but she ruled out a global recession.
“The year is going to be difficult,” Georgieva said during a seminar on global economic prospects, while it was not clear yet the extent of the repercussions of the war in Ukraine. She added, “We are witnessing a shock in the prices of raw materials, especially food prices.”
In April, the IMF cut its global growth forecast to 3.6% for 2022 due to the fallout from the war in Ukraine. This is a decrease of 0.8% compared to the January forecast.
Georgieva indicated that “the prospects have become bleak” after these expectations, and said that the economic repercussions of the closure measures in China exacerbated those resulting from the war, as well as the tightening of financial policies in a number of countries, including the United States. Countries are facing accelerating inflation. The repercussions of the war may worsen after, which increases the fears of a growing number of economic observers of a global downturn.
The Organization for Economic Cooperation and Development (OECD), which includes developed countries, also indicated that the G7 countries recorded in the first quarter a decline of 0.1% in the growth rate.
In response to a question about the risks of deflation in developed countries, Georgieva said that a global economic downturn is not on the horizon “currently, but this does not mean that it is not possible.”
“We will see a regression in some countries that have not yet recovered from the Covid crisis, that are highly dependent on Russia or on food imports, and that are already showing weaknesses,” Georgieva added.