International Monetary Fund warned that its outlook for global economic growth over the next five years is the weakest in more than three decades, urging nations to avoid economic fragmentation caused by geopolitical tension and take steps to bolster productivity. The emergency lender sees the world economy expanding about 3% over the next half decade as higher interest rates bite, Managing Director Kristalina Georgieva said in a speech in Washington Thursday.
That’s the lowest medium-term growth forecast since 1990 and less than the five-year average of 3.8% from the past two decades.
For 2023, global gross domestic product will likely expand by less than 3%, she said. That’s in line with the fund’s January forecast of 2.9%. About 90% of advanced economies will see growth slow this year as tighter monetary policy weighs on demand and slows economic activity in the US and euro area, the IMF said. It plans to release a more detailed World Economic Outlook report on April 11 as part of its Spring Meetings held together with the World Bank.
Russia’s invasion of Ukraine has worsened already tense relations between the US and China, exacerbated a global inflation crisis and is spurring hunger around the world. “The world economy as a whole is now less able to support the weakest members,” Georgieva said in a Bloomberg Television interview with Tom Keene. “Why? The peace dividend is gone.”
