IMF Calls Global Economy "Underwhelming" with Low Growth and High Debts and Prices
Finance ministers from all over the world close a week of talks focused on the global economy, unsustainable country debts and climate challenges. The IMF forecast global economic growth at 3.2% annually, a decades low and what the Fund called, "underwhelming."
“We heard a lot of messages during the meetings that the economy was strong, but the weak economic growth projections haunted the meetings,” said Eric LeCompte, Executive Director of the religious development group Jubilee USA Network and a United Nations finance expert who monitored IMF meetings since 2010. "The forecasts for Africa and the Middle East were awful and are coupled with high youth unemployment and food crises."
The low growth and high debt is an “unforgiving combination,” said the IMF Managing Director Kristalina Georgieva in her curtain-raiser speech.
“The IMF and G20 should not treat what is happening as a short-term debt payment problem. We are experiencing the most significant global debt crisis in decades,” added LeCompte. “Our failure to act now on debt crisis solutions means more difficult and expensive debt problems in the future.”
The World Bank reports that deficits in the average low-income country doubled, becoming the main driver of high indebtedness. In the poorest of those countries, average income remains 14% below their pre-pandemic levels.
G20 Finance ministers, in their last meeting under the Brazilian Presidency, endorsed a plan to expand the funding capacity of development banks. Reforms agreed this year will increase development bank finance by $35 billion a year, about one-eighth of what experts commissioned by the group said was needed.
"Brazil's G20 Presidency set a path to reach climate and development targets," shared LeCompte. "The questions are how long will it take for the G20 to follow that path and whether the world has enough time to wait."
While the G20 managed to deliver a consensus statement, the policymaking bodies of the IMF and the World Bank did not.
"War and conflicts continue to make it difficult for world leaders to forge agreements,” commented LeCompte.
Decisions announced at the IMF meetings included increasing IMF zero-interest rate lending and the reduction of IMF interest rates on large, long-term emergency loans.
Read Jubilee USA's statement on the Development Committee meeting here.
Read Jubilee USA's statement on the IMFC meeting here.
Read Jubilee USA's statement on the G20 ministerial meeting here.
Read Jubilee USA's statement on the World Economic Outlook report here.
Read Jubilee USA's press release on IMF chief Kristalina Georgieva's curtain-raiser speech here.