Bad omen for the economy, and worse for the poor – Juventude Rebelde

WASHINGTON, April 11 – With bitter expectations and no prospects for a solution, the International Monetary Fund and the World Bank are holding their so-called spring meeting this week.

The appointment takes place in the midst of uncertainty caused by high inflation, high interest rates, and what these international financial institutions call a segmented economy, given the apparent differences in the development of different countries.

Fund manager Kristalina Georgieva said: “The long-awaited recovery, a strong recovery is still something that hasn’t happened yet, and why, because there is a big problem with inflation.”

Projections indicate that the global economy will grow by barely 3 percent in the next five years, a figure that experts consider much lower than the 3.8 percent achieved in previous years.

Again, Georgieva criticized central banks for raising interest rates to fight inflation, warning that this “of course hinders the prospects for strong growth.”

Obviously, the head of the fund acknowledged that things will be worse for the poorest countries, and reminded that economic activity has faced one crisis after another since the pandemic.

“The bonds that unite us are getting weaker and the fragmentation is deepening (…) The cost of trade fragmentation could be seven percent of global GDP over the years,” he added.

With regard to the discrepancy in growth, David Malpass, President of the World Bank Group, considered that today there are more people with low incomes, which complicates their quality of life in the face of high inflation.

Malpass added, “Instead of convergence, there is divergence (…) that means inequality, fragility for countries, and we see many countries that fall into a fragile situation, which is something that worries us as prices rise.” .

In addition, he said that in many developing economies there is a “phase of decapitalization rather than recapitalization” in terms of investments that allow creating conditions for higher growth.

Both Georgieva and Malpass emphasized that a rapid increase in interest rates generates greater pressure to pay interest on external debt in low- and middle-income countries, which is why dozens of them will default.