The global economy is expected to grow about 3% over the next five years — the slowest pace since 1990, the head of the International Monetary Fund said.
Kristalina Georgieva said the road was “rough and foggy” – and warned that working together to resolve the issues was becoming more difficult.
She addressed the IMF’s annual meeting in Washington.
In her remarks, she called for more help for low-income countries.
“Additional support from wealthier countries is essential for the most vulnerable members of our global family,” she said, urging countries to increase funding for the IMF, which provides low-cost loans to countries in need.
The organization is preparing for a wave of requests for help or debt restructuring as the shocks of the Covid-19 crisis, the war in Ukraine and the rising cost of living continue to reverberate.
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Last year, global growth fell by almost half to 3.4% after a post-pandemic surge in 2021.
That was less than the 3.8% average growth of the past two decades. The slowdown has continued this year despite strong labor markets in countries like the US.
The IMF expects growth to slip below 3% in 2023, with India and China accounting for more than half of the growth.
Around 90% of advanced economies are expected to see growth slow, reflecting the strain of higher borrowing costs, after central banks sharply hiked interest rates to stabilize rising prices.
For low-income countries, higher borrowing costs come at a time when demand for their exports is slowing.
“It’s a huge blow that will make it even harder for low-income countries to catch up,” Ms Georgieva said.
“Poverty and hunger could increase further, a dangerous trend triggered by the Covid crisis,” she added.
While calling for support for vulnerable nations, Ms Georgieva said authorities should keep raising interest rates to fight inflation “as long as financial pressures remain contained”.
“If that were to change, policymakers would face an even more complicated task with difficult trade-offs between their inflation and financial stability targets and the use of their respective instruments,” she said.
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