The International Monetary Fund (IMF) has issued a warning about several factors, such as wars, trade tensions, high debts, and low growth, that could prolong an era of economic mediocrity. This could leave many countries without the necessary resources to address poverty and climate change. According to IMF Managing Director Kristalina Georgieva, conflicts in the Middle East and Europe, rising global prices, and unsatisfactory medium-term growth prospects justify caution, despite expectations of a smooth economic transition.
In her speech, Georgieva pointed out that the implementation of protectionist policies and trade tensions between the United States and China could further cool an already weak global economy. This situation occurs in a context where a scenario of low growth and high levels of global indebtedness is expected. The IMF projects that by the end of 2024, global public debt will reach 100 trillion dollars, representing 93% of global GDP, mainly driven by the U.S. and China.
The organization warns that the projected economic growth will not be enough to address needs such as job creation, paying significant debts, and investing in critical areas like the transition to clean energy. Georgieva made these statements ahead of the IMF and World Bank's annual meetings, which will take place in Washington next week, with participation from finance ministers and central bank leaders from around the world.
As U.S. voters consider the economy their main concern, the IMF has taken a critical stance towards the U.S. in recent months, despite praising the Federal Reserve's measures to control inflation. Despite the IMF's warnings, improvements have been observed in controlling inflation, easing supply chain restrictions, and moderation in food and energy prices.
Despite pointing out the need to control deficits, the impact of excessive debt, and the risks of aggressive trade policies, Georgieva highlighted notable advancements, such as the orderly cooling of labor markets in both the U.S. and the European Union. The IMF is expected to publish an update on its global economic outlook this week.
