Georgieva painted a bleak picture in her speech ahead of the International Monetary Fund meetingsWorld Bank Annual meeting, in Washington, next week, but she said more could still be done to boost growth, reduce debt and build a more robust economy.
It warned of the continued rise in prices that disproportionately affect the poor, and the impact of the escalation of the conflict in the Middle East on the stability of regional economies and global commodity markets.
Georgieva also expressed concerns about increased military spending affecting funding available for other priorities, including aid to developing countries.
The Director of the International Monetary Fund stressed that the international community must unite its ranks “despite the difficult geopolitical environment” to deal with common challenges such as weak growth and the existential threat resulting from climate change.
Georgieva used her speech to praise the progress achieved in dealing with inflation while warning of the risks ahead for the global economy.
“A combination of decisive action in monetary policy, easing supply chain restrictions, and moderation in food and energy prices is leading us toward price stability,” she said in prepared remarks.
“This happened without pushing the global economy into recession and causing widespread job losses,” she added.
She added that while inflation rates decline, “the high price levels that we feel will continue,” noting that high prices have a greater impact on the world’s poorer economies and individuals.
Georgieva’s speech came days before the annual meetings of the International Monetary Fund and the World Bank were held in Washington in the wake of two raging wars and weeks before the US presidential elections in which former Republican President Donald Trump and Democratic US Vice President Kamala Harris are competing.
Trump has repeatedly threatened to raise tariffs significantly, while at the same time indicating that the President of the United States should have greater authority to make monetary decisions, knowing that this task is currently limited to the Federal Reserve.
In her speech, Georgieva praised the independence of central banks around the world and international financial institutions such as the International Monetary Fund, which provided financial support during the Covid-19 outbreak.
But she warned that the world faces a “difficult geopolitical environment” with the expanding conflict in the Middle East exacerbating the challenges facing policymakers seeking to deal with an “unforgiving mix” of weak global growth and high levels of global public debt.
“We are living in a period of profound turmoil,” she said, warning that the peace gains provided by the end of the Cold War were facing “increasing danger.”
She stated, “In a world witnessing more wars and more insecurity, defense costs could continue to rise as budgets allocated to aid decline in a way that does not keep pace with the growing needs of developing countries.”
She added, “We must not allow this reality to become an excuse for inaction to prevent the further disintegration of the global economy.”
She continued, “Quite the opposite. I will call during these annual meetings for us to work together…to improve our collective prospects.”
