IMF warns that global economy is facing the worst period of growth for 30 years.

According to the International Monetary Fund, the world’s economy will experience its worst growth period since the 1990s in the next five-years as high inflation and financial risk stalk central banks and governments.

Kristalina Georgieva (managing director of IMF) stated that the world’s gross domestic product will grow by an average of 3% over the next five year. This is below the 3.8 percent of the past 20 years and the lowest level in over 30 years.

Georgieva stated that despite rising geopolitical tensions, and still-high inflation a robust recovery is unlikely. This is bad news for everyone, particularly the most vulnerable. This makes it more difficult to reduce poverty, heal economic scars from the Covid crisis, and offer better opportunities for everyone.

After banking tremors in small American banks spread to smaller regional banks, Credit Suisse was brought down last month by the global finance ministers and central bankers.

Georgieva stated that concerns about financial stability shouldn’t stop central banks from raising interest rate to combat inflation. This has been a stubbornly persistent trend in the United States and the eurozone this year.

She stated that central banks should “stay the course in fighting inflation, holding a tight position to prevent a de-anchoring inflation expectations.”

Since its inception, the IMF has advocated aggressive monetary tightening. They fear that persistent inflation will slow down future growth and impose high costs on low-income households. Georgieva stated that governments should reduce their budget deficits to bring inflation down to 2% per year.

The fund urged governments to impose a regulation clampdown on “shadow banks” this Week. This includes pension funds, insurance companies, and hedge funds that take out debt and are subject to rising interest rates because they have long-dated assets like government bonds.

Georgieva stated that banks today are stronger and more resilient, and that policymakers have been remarkable swift and thorough in their recent weeks. “Concerns still remain about vulnerabilities that may not be visible, both at banks and non-banks. Do not be complacent.

Rising interest rates worldwide have increased debt pressures on poorer nations, who have been brought to the brink by default and turned to IMF for assistance.

It is expected that the IMF will use its spring meetings in order to press rich creditor countries to offer debt relief to stricken nations so it can approve its tranches. The US and China have been in a geopolitical dispute for almost a year, with Zambia being stuck in the middle.

Georgieva offered generous debt relief terms in a “plea” made to rich creditor nations. She stated that additional support from wealthy countries was essential for the “weakest” members of our global family. I would like to make two pleas on their behalf. First, help them to handle the debt burden, which was made more difficult by the shocks in the past years. Second, help to ensure that the IMF is able to continue to support them in years to come.