Home ›› 15 Oct 2022 ›› Front
The world is at risk of facing a harsh recession next year which might leave crores of people suffering from acute food insecurity, the International Monetary Fund (IMF) and the World Bank warned again on Thursday.
Addressing the fourth day of the IMF annual conference, WB President David Malpass and IMF Managing Director Kristalina Georgieva said exorbitant fuel price hike and recession rate will lead to a food crisis which is feared to affect over 35 crore people across the globe.
They called on governments to remain alert and put a leash on the rising inflation rates in order to cushion the blow on those vulnerable from the looming disaster.
According to the IMF and WB, nearly 4 crore people in 48 countries are currently experiencing extreme food crises, with Costa Rica, Bosnia and Rwanda facing the worst of all. However, strong economies are also vulnerable to the coming recession.
The crisis will put developing countries in dire situations, they said, adding that governments should rein in inflation to tackle the crisis.
The aftermath of the pandemic, Russia’s war on Ukraine, and climate change are the key contributing factors in the global rising cost of living and food crisis. The IMF has warned that there is a one-in-four chance that global growth could drop to a historic low of 2% next year.
Urging countries to bring inflation down on Thursday, IMF’s Kristalina Georgieva said, “We know that rising interest rates come at a cost to growth. But we also know that not tightening enough to put a leash on inflation would mean interest rates staying higher for longer, resulting in even more harm to growth and people. For central banks, this means taking decisive action when necessary, and communicating as clearly as they can.”
The IMF official also stressed on prioritising the safeguarding of vulnerable households and businesses at a time when fiscal buffers are exhausted because of the pandemic and levels of debt are very high.
She said, “The obvious conclusion is that policy measures need to be well targeted and they need to be temporary. Steer away from across-the-board fiscal support that is neither effective nor affordable. If we are to help people and fight inflation, we must ensure that fiscal and monetary policy go hand in hand.
“When monetary policy hits the brakes, fiscal policy should not step on the accelerator—that would make for a very dangerous ride.”
In addressing the continuing effects of Russia’s war in Ukraine on fuel prices, Georgieva said, “I am convinced that if we do not restore price stability, we will undermine prospects for growth. We would create more uncertainty for investors, and we would put consumers in a very difficult spot.”
Speaking about debt-ridden countries facing a strong dollar, Georgieva said it is a must to support vulnerable emerging markets and developing countries as the situation is grimmer for them than the rest.
In a separate press conference, WB President David Malpass said the poor will be more vulnerable in the coming recession.
“Caution is needed. If inflation is not controlled, the pressure will increase on the people of developing countries. At the same time, it will become more difficult for poor people to survive,” he said.
Discussion on $450bn IMF loan to begin this week
Discussions on Bangladesh’s requested $450 billion budgetary support from the IMF to stabilise the economy will begin next week, Anne-Marie Gulde-Wolf, deputy director of the Asia and Pacific Department at IMF, told journalists on the sideline of the organisation’s annual conference.
According to the IMF’s regional economic outlook, Bangladesh is facing some risks in maintaining its growth in export and remittance income. However, the organisation has forecast a GDP growth of 7.2 per cent this year and 6 percent next year for the South Asian country.
