The world economy is expected to grow less than 3% this year, the International Monetary Fund warned Thursday, dragged by a continued slowdown in almost all the world's advanced economies.
"With rising geopolitical tensions, with inflation still running high, a robust recovery remains elusive," IMF Managing Director Kristalina Georgieva said.
"That harms the prospects of everyone, especially for the most vulnerable people and most vulnerable countries," she added at an event in Washington.
Global growth almost halved last year to 3.4% as the impact of Russia's invasion of Ukraine rippled through the world economy, abruptly halting the recovery from the COVID-19 pandemic.
While Asia's emerging markets are expected to see substantial increases in economic output – with India and China predicted to account for half of all growth this year – the good news will be outweighed by a slowdown expected for 90% of the world's advanced economies.
"Growth remains historically weak – now and in the medium term," said Georgieva.
She said growth is expected to remain around 3% for the next five years, calling it "our lowest medium-term growth forecast since 1990, and well below the average of 3.8% from the past two decades."
She said slower growth would be a "severe blow," making it even harder for low-income nations to catch up.
"Poverty and hunger could further increase, a dangerous trend that was started by the COVID crisis," she said.
Low-income countries are expected to suffer a double shock from high borrowing costs and a decline in demand for their exports, which could cause poverty and hunger to increase, Georgieva said.
"About 15% of low-income countries are already in debt distress, and an additional 45% are near it," she added, calling on wealthier IMF members to do more to provide support.
Georgieva's comments at a Politico event at the Meridian International Center come ahead of next week's spring meetings of the IMF and its sister lending agency, the World Bank, in Washington, where policymakers will convene to discuss the global economy's most pressing issues.
The annual gathering will take place as central banks around the world continue to raise interest rates to tame persistent inflation and as an ongoing debt crisis in emerging economies pushes debt burdens higher, preventing nations from growing.
The IMF head said persistently high-interest rates, a series of bank failures in the U.S. and Europe, and deepening geopolitical divisions are threatening global financial stability.
Georgieva said that countries have thus far been "resilient climbers" out of the coronavirus pandemic, which has killed almost 6.9 million people globally, according to the World Health Organization (WHO), and has disrupted global supply chains and exacerbated worldwide food insecurity.
But advanced economies face the challenges of high inflation and poorer nations are burdened by debt, all as the United States, the European Union and others are rethinking their trade relationships with China.
Tensions with China accelerated after Russia invaded Ukraine in February 2022, with Chinese President Xi Jinping pledging a friendship without limits to Russian President Vladimir Putin.
Georgieva warned in her speech: "But the path ahead – and especially the path back to robust growth – is rough and foggy, and the ropes that hold us together may be weaker now than they were just a few years ago."
"Now is not the time to be complacent," she said. "We are in a more shock-prone world, and we have to be ready for it," she added.
