International financial institutions have no short-term measures to address the inequalities created by the post-pandemic crisis. Author: EFE
WASHINGTON, April 11th. — With bitter forecasts and a lack of prospects for a decision, the International Monetary Fund and the World Bank are holding a so-called spring meeting this week.
The appointment comes amid uncertainty caused by high inflation, high interest rates and what these international financial institutions are calling a fragmented economy caused by distinct differences in the development of different countries.
“A long-awaited recovery, a sustainable recovery is something that has not happened yet, and why, because there is a significant problem of inflation,” said Kristalina Georgieva, managing director of the Fund.
The global economy is expected to grow by just 3 percent over the next five years, which experts say is much lower than the 3.8 percent achieved in previous years.
Once again, Georgieva criticized central banks for raising interest rates to fight inflation, warning that it “certainly undermines sustainable growth prospects.”
Apparently, the head of the fund acknowledged that the poorest countries would be worse off, and recalled that since the pandemic, economic activity has faced one crisis after another.
“The bonds that unite us are weakening, fragmentation is deepening (…) The cost of trade fragmentation could be seven percent of global GDP over the years,” he added.
Regarding growth divergence, David Malpass, President of the World Bank Group, felt that today there are more people with lower incomes, which complicates their quality of life in an environment of high inflation.
“Instead of convergence, there is divergence (…), which means inequality, fragility for countries, and we see that many countries fall into a situation of instability, which worries us with high prices,” Malpass added. .
In addition, he said that a number of emerging economies are experiencing a “decapitalization phase instead of recapitalization” in terms of investment to create the conditions for higher growth.
Both Georgieva and Malpass stressed that rapidly rising interest rates are creating more pressure to pay interest on foreign debt in low- and middle-income countries, which is why dozens of them are said to default.
Source: Juventud Rebelde