IMF says risks to financial stability have increased and to remain vigilant
International Monetary Fund chief Kristalina Georgieva said on Sunday that, ‘risks to financial stability have increased and called for continued vigilance although actions by advanced economies have calmed market stress’.
Challenge
The IMF managing director is reported to have that 2023 would be another challenging year, with global growth slowing to below 3% due to scarring from the pandemic, the war in Ukraine and monetary tightening.
‘Even with a better outlook for 2024, global growth will remain well below its historic average of 3.8% and the overall outlook remained weak,’ she said at the China Development Forum.
The IMF stated that policymakers in advanced economies had responded decisively to financial stability risks in the wake of bank collapses but vigilance was still needed.
The IMF director reportedly said, ‘We continue to monitor developments closely and are assessing potential implications for the global economic outlook and global financial stability,’ adding that, ‘the IMF was paying close attention to the most vulnerable countries, particularly low-income countries with high levels of debt’.
Fragmentation
She also warned of geo-economic fragmentation that could split the world into rival economic blocs, resulting in ‘a dangerous division that would leave everyone poorer and less secure.‘
Kristalina Georgieva is also reported to have said, ‘China’s strong economic rebound, with projected GDP growth of 5.2% in 2023, offered some hope for the world economy, with China expected to account for around one third of global growth in 2023‘.
‘The IMF estimates that every 1% increase in GDP growth in China results in a 0.3 percentage point rise in growth in other Asian economies,’ she said.