The IMF affirms that the risks of a decline in the world economy are growing

The IMF warns that the world economy has reached another “moment of great uncertainty” in its faltering recovery and is now expected to grow 2.8 percent in 2023, before rising to 3 percent growth in 2024.

IMF Managing Director Kristalina Georgieva said this is the weakest medium-term outlook for the global economy since the 1990s.

To talk about the subject, we have interviewed Petya Koeva-Brooks, Deputy Director of the Research Department of the IMF.

Russia’s invasion of Ukraine and the ongoing war caused severe disruptions in commodity and energy prices, as well as trade, triggering the start of a major reorientation and adjustment in many economies.

Q. How can the IMF assess the reorientation and adjustment of the euro zone economy?

A. “We have been surprised by the resilience shown by the eurozone economies, which have adjusted to the shock. Part of that has been reliance on non-Russian sources of gas and liquefied gas, and we have seen a reorientation of some supplies coming from Asia And at the same time we have also seen another part of the adjustment towards other sources of energy which ultimately contributed to a growth rate of the euro zone economy last year of the order of 3.5%, which is a pretty good growth rate, again, considering the size of the shock.”

A hard landing, especially for advanced economies, as predicted by the IMF, has become a much greater risk. The German economy is now expected to contract in 2023.

Q. How hard would this landing be for the largest economy in the euro zone?

A. “Well, our baseline forecast is still a soft landing for the global economy and advanced economies. That’s our baseline. What we’re saying is that the risks around it have increased and the downside risks In particular, looking at the German economy, we expect growth this year to be very close to zero minus 0.1%, which is a small downgrade from the January forecast, due to the tightening of financial and monetary policy conditions necessary to fight inflation. At the same time, we expect growth to pick up in Germany, the euro zone and the world at large in 2024.”

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