Israel and Gaza Conflict Raises Concerns for Global Economy
As world leaders arrive for the Annual IMF and World Bank Meetings, the IMF forecasts the global economy to grow 3% this year, which remains below the average of growth for the two decades before the pandemic.
"According to the IMF, our economy is still struggling to recover from the impacts of the pandemic and other crises,” said Eric LeCompte, Executive Director of Jubilee USA Network, which focused on IMF policies for more than 25 years. "Less financial stability means more conflict, more poverty and more crises."
Both of the released flagship reports, the Global Financial Stability Report and the World Economic Outlook were prepared before the emergence of the Israel and Gaza conflict.
"While the report could not consider the Israel and Gaza conflict, it does see the escalation of the Ukraine war as a financial stability risk," shared LeCompte. "The loss of human life due to war and conflict is unacceptable. Beyond the deaths, conflict also hurts our global economy and the poor everywhere."
The IMF predicts global inflation will fall almost 2 percentage points to 6.9%. The companion Global Financial Stability Report expressed concerns on continued inflation and warned that measures to bring it down will need to continue.
"The growing risks to financial stability are deeply concerning,” shared LeCompte. “But some ways that we fight inflation, like raising interest rates, creates higher debt loads for countries and makes food too expensive for all of us.”
The IMF called for preemptive debt restructurings in the many countries with high debt risks.
"High interest rates mean that developing countries will have higher debt payments that lead to even more debt crises,” noted LeCompte who serves on United Nations finance expert groups. "Quicker and more comprehensive debt restructurings are needed."
An entire chapter of the financial stability publication focused on the role of the financial sector in regards to climate investment needs.
"In developing countries, climate investments will need to rise to $2 trillion per year by 2030. The IMF expects private finance will need to provide the lion’s share of that amount,” stated LeCompte. "Developing countries need resources to tackle climate change. If they don't, it will impact financial stability."
Read Jubilee USA's statement on the IMF Global Financial Stability report here.
Read Jubilee USA's statement on the IMF World Economic Outlook report here.
Read the full Global Financial Stability Report here.
Read the full World Economic Outlook Report here.
Read Jubilee USA's press release on Annual Meetings agenda here.
Read Jubilee USA's press release on IMF chief Kristalina Georgieva's curtain raiser speech here.
Join Jubilee USA and partners for IMF and World Bank event: "Defusing the Debt Time Bomb: The Role of an Effective Crisis Prevention and Resolution Architecture." More information here.