World economy to grow by less than 3% in 2023: IMF chief

The sharp slowdown in the world economy will be against the backdrop of the COVID-19 pandemic and the aftermath of the Russia-Ukraine war, she said ahead of the spring meetings of the IMF and the World Bank next week.

"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 pointed out.

Around 90 per cent of advanced economies may witness a growth rate dip, she said. The IMF sees economic activity in the United States and the euro area slowing, where higher interest rates weigh on demand.

Global growth in 2022 dropped by almost half, from 6.1 per cent to 3.4 per cent, Georgieva said.

Low-income countries would find it challenging to catch up due to slower growth, which she said was a ‘severe blow’.

"Poverty and hunger could further increase, a dangerous trend that was started by the COVID-19 crisis," she said.

Higher borrowing costs come at a time when their export demand has weakened for low-income nations, she said.

Although the global banking system had come a long way since the 2008 financial crisis, "concerns remain about vulnerabilities that may be hidden, not just at banks but also non-banks", she said.

"With rising geopolitical tensions and still-high inflation, a robust recovery remains elusive," she cautioned.

Fibre2Fashion News Desk (DS)