IMF’s Chief: Prolonged Economic Stagnation Will Widen Global Inequalities

A meeting of finance ministers and central bankers from the G-20 countries kicks off today in Rio de Janeiro, as reported by BTA.

International Monetary Fund Managing Director Kristalina Georgieva has issued a warning about the rising global inequalities in a blog post ahead of the meeting. She noted that prolonged periods of slow economic growth could exacerbate global inequalities, though a balanced set of policies could help mitigate this effect.

Georgieva's analysis highlights that the global economy is slowing down, which could significantly hinder efforts to combat poverty and inequality. The IMF's updated economic outlook forecasts global growth at 3.2 percent for this year and 3.3 percent in 2025, a decline from the average 3.8 percent growth observed at the start of the century before the pandemic. The IMF’s projections for medium-term growth continue to reflect some of the lowest levels seen in recent decades.

The IMF’s new analysis reveals that stagnation lasting four years or more can increase income inequality across countries by nearly 20 percent, a sharper rise compared to the impact of recessions. Georgieva emphasized that the longer the world experiences low growth, the more pronounced the inequalities will become. She added that growing inequality can lead to increased dissatisfaction with economic integration and technological progress.

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