Georgieva told Archyde.com that in the coming weeks, the fund will reduce its forecast for 3.6 percent growth in the global economy for the third time this year, adding that the fund’s economists are still preparing the final new ratios.
The International Monetary Fund is expected to publish its updated forecasts for 2022 and 2023 in late July, after cutting its forecast by nearly one percent in April.
The global economy achieved a growth rate of 6.1 percent in 2021.
“The outlook since our last update in April has become significantly bleak,” Georgieva said in her interview, citing greater global inflation, more significant interest rate increases, slowing economic growth in China, and escalating sanctions related to the Russian war in Ukraine.
“We are in the midst of choppy waves,” she added. In response to a question whether she can rule out a global recession, Georgieva said, “The risks are increasing, so we cannot rule it out.”
She added that recent economic data showed that some large economies, including those of China and Russia, contracted in the second quarter, indicating that risks may be higher in 2023.
She continued, “The year 2022 will be difficult, but the year 2023 may be more difficult. The risks of recession increased in 2023.”
Federal Reserve Chairman Jerome Powell announced last month that the US central bank is not trying to engineer a recession, but is fully committed to controlling prices, even if that leads to the risk of economic deflation.
While Georgieva stressed that tightening financial policies for a longer period would further complicate the outlook for the global economy, she added that it was necessary to control price hikes.