$4trn global economy recession likely to occur next year – IMF, World Bank
A global recession is likely to occur next year according to Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva.
Making the disclosure during a conversation with President of the World Bank, David Malpass and monitored by norvanreports, on the prevailing global economic conditions as a curtain raiser to the 2022 Annual Meetings, Ms Georgieva noted the recession is likely to wipe away $4 trillion of the world’s GDP.
According to her, the global recession will be fuelled by the slowdown in growth of advanced economies.
“There’s the risk and the real danger of a world recession next year, some of the advanced economies in Europe are slowing.
“We are seeing slowdown in all three key economies of the world, Eurozone because primarily of gas prices shooting up, in China because of COVID disruptions and the volatility of the housing sector which we see as a very significant problem in China dragging down growth. And in the United States still see very strong labour market, but also losing a bit of momentum because interest rates are starting to bite.
“We have calculated that about 1/3 equivalent of the world economy would have at least two consecutive quarters of negative growth this year and next year.
“And that the total amount that would be wiped out by the slowdown of the world economy is going to be $4 trillion. This is the size of Germany GDP which is gone,” she stated.
Speaking further during the conversation, Ms Georgieva noted the IMF and the World Bank need to join forces together in providing more fiscal resources to developing economies to help ease the adverse global macroeconomic impacts on developing economies.
“The IMF and World Bank need to join forces to help developing economies badly hit by the pandemic, inflation, the Russian-Ukraine war, climate change and others so as to ease the pain ahead in 2023.
“One of the ways we need to collaborate is moving monies to emerging markets from advanced economies,” she added.
The IMF and World Bank at this year’s annual meetings, are expected to discuss the unsustainable debt levels of developing economies, climate change finance, among others.
