IMF, WB warn global crisis will get worse

The World Bank (WB) and the International Monetary Fund (IMF) have warned that the ongoing global crisis will get worse over the next few years.

By the end of this year, the growth of the global economy will decrease to 3.2 per cent which is expected to slow further in 2023. However, inflationary pressures may ease in the coming years.

The matter was discussed on the second day of the 2022 annual general meeting of the International Monetary Fund (IMF) and the World Bank held in Washington DC, the capital of the United States.

According to the World Bank-IMF forecast as countries grapple with the fallout from Russia’s invasion of Ukraine, spiralling cost-of-living and economic downturns.

The world economy has been dealt multiple blows, with the war in Ukraine driving up food and energy prices following the coronavirus outbreak while soaring costs and rising interest rates threaten to reverberate around the globe.

This recession of the economy will be more pronounced in the coming year. The growth rate of the world economy will decrease from 6 per cent in 2021 to 3.2 per cent which will further decrease to 2.3 per cent in 2023.

At this time, the growth of the developed world including Europe and America will decrease.

In response to the question of what will happen to Bangladesh in the coming days, World Bank Vice President Junaid Kamal Ahmad told “The Business Post” that if a country’s growth slows down due to an economic shock, the poverty rate will increase.

“The amount of money reaching people should rise. Bangladesh is still Soaring food and energy prices are raising the risk of social unrest but attempting to tame costs through tax cuts, subsidies and price controls would be too costly, the IMF said Wednesday.

The fund’s comments, in its latest Fiscal Monitor report, come as food prices have surged by half since 2019 while energy bills have soared in the wake of Russia’s invasion of Ukraine.

“Countries all around the world are facing more pressing and more painful trade-offs,” Vitor Gaspar, director of IMF’s fiscal affairs department, told AFP.

The combination of inflation along with food and energy price surges point to a cost-of-living crisis, he said.

The global economy has been hit by multiple shocks in the past year.

Countries spent heavily to protect their economies during the pandemic, then faced supply chain issues as they emerged from Covid lockdowns.

Inflation soared further after Russia invaded Ukraine, with food and energy prices going through the roof.

“Households are struggling with elevated food and energy prices, raising the risk of social unrest,” the IMF report said.

But, it added, “fiscal policy trade-offs are increasingly difficult, especially for high-debt countries where responses to the Covid-19 pandemic exhausted their fiscal space.”