IMF Chief Predicts India and China to Account for Half of Global Growth in 2023

GG News Bureau

Washington, 7th April. The IMF chief said on Thursday that the global economy will grow by less than 3% this year, with India and China expected to account for half of global growth by 2023.

Kristalina Georgieva, managing director of the International Monetary Fund (IMF), warned that the world economy’s sharp slowdown last year as a result of the raging pandemic and Russia’s military invasion of Ukraine would continue this year.

The period of slower economic activity will be prolonged, with the next five years witnessing less than 3 per cent growth, “our lowest medium-term growth forecast since 1990, and well below the average of 3.8 per cent from the past two decades,” she said.

“Some momentum comes from emerging economies – Asia especially is a bright spot. India and China are expected to account for half of global growth in 2023. But others face a steeper climb,” she explained.

“After a strong recovery in 2021 came the severe shock of Russia’s war in Ukraine and its wide-ranging consequences – global growth in 2022 dropped by almost half, from 6.1 to 3.4 per cent,” Georgieva said.

Slower growth, according to Georgieva, would be a “severe blow,” making it even more difficult for low-income countries to catch up.

“Poverty and hunger could further increase, a dangerous trend that was started by the COVID crisis,” she explained.

Her remarks come ahead of the IMF and World Bank’s spring meetings next week, where policymakers will gather to discuss the global economy’s most pressing issues.

The annual meeting will take place as central banks around the world continue to raise interest rates in order to slow the rate of inflation.

About 90 per cent of advanced economies are projected to see a decline in their growth rates this year, she said.

For low-income countries, higher borrowing costs come at a time of weakening demand for their exports, she said.

While the global banking system has “come a long way” since the 2008 financial crisis, “concerns remain about vulnerabilities that may be hidden, not just at banks but also at non-banks,” Georgieva said.

“Now is not the time for complacency.”