The President of the International Monetary Fund (IMF), Kristalina Georgieva, stated on Wednesday (October 25) that global economic growth has slowed to 3% and will continue to slow in the coming years, while high interest rates will further drag down economic growth.
In the latest World Economic Outlook released by the IMF this month, it is expected that the world economy will grow by 3% this year, consistent with the forecast in July; However, the global economic growth forecast for 2024 has been lowered to 2.9%, which is 0.1 percentage points lower than the forecast in July.
Although the global economy has shown signs of weakness, Georgieva stated at the "Future Investment Initiative (FII)" panel discussion held in Riyadh, Saudi Arabia that inflation remains high and its rate of decline is not fast enough. "This requires interest rates to remain high, which will pour more cold water on economic growth
For the past 20 years, we have been living in a 'dream zone' interest rate environment. We hope to see policies gradually normalize... Now I call on everyone to fasten their seatbelts. Everyone should understand that high interest rates will last longer
She said, "Structural factors cannot be ignored as an interface to combat inflation. Inflation is terrifying for economic growth. Interest rates are not suffocating, they just make life more difficult
In addition, Georgieva also talked about geopolitical conflicts and international cooperation. The ongoing war in the Middle East undoubtedly has a huge impact on economic activity.
For countries such as Egypt, Lebanon, and Jordan that rely on tourism, the uncertainty brought by war will be a huge blow.
She said, "We see the cost of fragmentation, they are very huge... We know that this will not be the last shock
Moreover, the ongoing conflicts in the Middle East are occurring at a time of slow growth, high interest rates, and rising costs of debt repayment
Georgieva also stated that in a fragmented world, international cooperation is the key to growth, which is the "top priority".