IMF: World faces weakest medium-term growth prospects in decades

(Patria) - International Monetary Fund (IMF) Managing Director Kristalina Georgieva said she is concerned that the world faces the weakest medium-term growth prospects in several decades, at just over three percent.

Georgieva said that interdependent challenges, such as high debt, fragmentation, and complexity in navigating the digital and green transitions, are hindering greater prosperity.

"In a low-growth world, there will likely be even more inequality," she said in a statement at the conclusion of the Third G20 Finance Ministers and Central Bank Governors Meeting in Brazil.

She stated that she came to the G20 with a simple message: the global economy must avoid getting stuck in low gear, which would lead to a more unequal and unstable world.

The IMF chief called for efforts to strengthen the foundations for strong growth and create new jobs through sound fiscal and monetary policy, a stable and inclusive financial system, progressive taxation, and increased support for vulnerable countries.

"New IMF analysis suggests that stagnation periods lasting four years or more tend to increase income inequality within countries by nearly 20 percent. This is a moral and ethical concern. It is also an economic concern - an unequal world is an unhappy world that may not be up to the task of adapting to the unstoppable transformations underway," Georgieva said.

Although inflation is declining in many countries, Georgieva encouraged central banks to resist premature easing of monetary policy when price pressures remain persistent.

The IMF expects global economic growth to reach 3.2 percent in 2024 and 3.3 percent in 2025.