Global economy like a “ship in troubled waters,” warns IMF chief

The head of the International Monetary Fund said the global economy was like a “ship in troubled waters” as she warned the current crisis was “rather likely to get worse than better”.

Kristalina Georgieva, chief executive of the IMF, said the organization was preparing to announce more downgrades next week that would result in £3.6 trillion being wiped from global output by 2026.

This massive wealth loss would be greater than the size of the German economy.

Warning: Kristalina Georgieva has said the IMF will announce further downgrades that would result in £3.6 trillion wiped out of global production by 2026

Warning: Kristalina Georgieva has said the IMF will announce further downgrades that would result in £3.6 trillion wiped out of global production by 2026

Warning: Kristalina Georgieva has said the IMF will announce further downgrades that would result in £3.6 trillion wiped out of global production by 2026

And in a mockery of Liz Truss’ tax cuts, she warned governments against giving their citizens “indiscriminate fiscal support” – rather than urging policymakers to help the poorest.

Georgieva’s speech at the opening of the IMF’s annual meeting in Washington DC came just days after the global regulator rebuked Prime Minister and Chancellor Kwasi Kwarteng.

She warned last week that her tax cuts in the September mini-budget could undermine the Bank of England’s efforts to curb rampant inflation.

Yesterday Georgieva reiterated this message: “While monetary policy is stepping on the brakes, one should not have fiscal policy stepping on the accelerator. It would make for a very bumpy and dangerous ride.”

Truss and Kwarteng have defended their policy, claiming it will boost growth over the long term.

But unless inflation is brought under control, Georgieva said, future interest rates would have to be “much higher and more sustainable, which would cause massive damage to growth and people.”

The IMF has cut its global growth expectations three times this year, to just 3.2 percent for 2022 and 2.9 percent for 2023.

Georgieva said when the organization releases its next World Economic Outlook next week, it will again downgrade growth for next year. “And we will point out that recession risks are rising,” she said.

“We estimate that countries, which account for about a third of the global economy, will experience at least two consecutive quarters of contraction this year or next.

And even if growth is positive, it will feel like a recession due to falling real incomes and rising prices.’

Several economists believe Britain is already in recession.

The euro zone is also on the brink of collapse, while the United States has already experienced two consecutive quarters of economic contraction.

Georgieva said: “This is not easy and will not be without pain in the near future. But the key is to avoid much greater and longer lasting pain for everyone.’

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https://www.soundhealthandlastingwealth.com/business/global-economy-like-a-ship-in-choppy-waters-warns-imf-boss/ Global economy like a “ship in troubled waters,” warns IMF chief

Brian Ashcraft

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