The IMF says the global economy should escape the recession

The international recession is not yet a reality. “We need to stay in a positive territory,” said Christalinage Orgieva, managing director of the International Monetary Fund, on Tuesday. In an interview with Foreign Policy Magazine in a video conference, Foreign Policy Magazine confirmed that international organizations will revise their forecasts downwards at next spring’s rally. “We have moved to the opposite environment because of the war in Ukraine,” she observed, as growth is recovering again with the prospect of a recession in inflation. Before adding, the world faced several simultaneous crises during the Ukrainian conflict, the pandemic crisis, and global warming.

The reduction in forecasts will be greater than what was done in January last year when the fund fell 0.5 points to a 4.4% increase in global GDP this year. Based on what the CEO points out, the growth rate should exceed 3.5%. Nevertheless, Cristalina Georgieva anticipates a recession in the most vulnerable countries that have not yet overcome the consequences of the Covid-19 pandemic crisis.

I am particularly concerned about low-income countries facing debt problems.

The rise in energy and food prices reinforced by the war in Ukraine is reflected in certain parts of the world by the risk of famine. “This is a big shock to emerging markets. I’m particularly worried about low-income countries facing debt problems. Today, this is related to 60% of emerging markets,” the fund said. The boss says.

Limited financial risk

When asked about the risks of Russia’s default payments following economic and financial sanctions by Western countries, Gitagopinato, the former Chief Economist of the Fund, was relieved. It would be “the direct impact on other parts of the world is quite limited”. The amount of payment deadlines that Russia must comply with is “relatively low on a global scale.” “This does not represent systemic risk in the global economy,” she added, noting the difficulties of certain banks, especially those exposed to the country.

One thing is certain: tomorrow’s world will emerge upset from this conflict. Gita Gopinath points out that payment systems are becoming more fragmented. This must be without questioning the increasing use of digital assets. With more than 100 central banks working to digitize their currencies, Cristalina Georgieva warns that the emergence of different platforms will complicate system interoperability. The increasing use of cryptocurrencies like Bitcoin also highlights the urgency to regulate these new markets, she said.

Similarly, the energy supply will no longer have the same configuration as before. In this regard, the Dallas Federal Reserve Bank of Dallas study, published Tuesday, is more pessimistic than the IMF. “If most of Russia’s energy exports are out of the market this year, a global recession seems inevitable,” she said. If these Russian supplies do not match the rest of the world, the recession threatens Europe in particular.