IMF, WB warn of increasing risk of global recession

The International Monetary Fund (IMF) and World Bank (WB) warned of a rising risk of a global recession as advanced economies slow and faster inflation forces the Federal Reserve to keep raising interest rates.

During the start of the IMF-WB 2022 Annual Meetings, IMF Managing Director Kristalina Georgieva pointed out that about one-third of the world economy will have at least two consecutive quarters of contraction this year and next, and that the lost output through 2026 will be $4 trillion.

WB President David Malpass, speaking alongside Georgieva, recalled these are the first face-to-face meetings in three years, after unthinkable events such as the pandemic, the Ukraine conflict and climate disasters on all continents.

“All of this has put people in a too difficult place. They are exhausted and have to cope with a cost-of-living crisis,” he said and warned this situation “is especially difficult for developing countries.”

Malpass, on the other hand, explained that developing countries’ debt levels “are becoming increasingly burdensome” and the rising interest rates is putting current situation much more serious, as do high inflation rates.