Image Source: Andrew Kelly/Reuters
At the opening of the World Economic Forum on Monday, the International Monetary Fund did not waste any moment and said that the global economy is in shambles and that it is in “its biggest test since the Second World War.”
The global economy is in a crisis. The world has been topped with one economic disaster after another.
In a statement, IMF Managing Director Kristalina Georgieva told stakeholders, “We face a potential confluence of calamities.”
The Russian-Ukrainian conflict has amplified the already existing effects of COVID 19, and it weighs heavily on economic recovery as well as stability throughout world markets. The jump in prices across countries has led to alarming inflation rates, which are bound to continue if these major complications go on.
The global economy is in a fragile state, with debt and price hikes adding to the pressure. Market turbulences create additional risks for countries around the world which is only further compounded by the supply chain disruption.
Also, climate change is another thing to think about.
With Russia cutting its gas and fuel exports, the International Energy Agency called out countries to encourage them to choose safer fuel alternatives even amid supply shortages. In a recent report, European Commission said that they would be using coal “a little longer” due to increased demand coupled with decreasing supplies.
IEA chief Faith Birol criticized leaders, saying, “Some people may well use Russia’sRussia’s invasion of Ukraine as an excuse for … a new wave of fossil fuel investments. It will forever close the door to reaching our climate targets.”
The International Monetary Fund is encouraging countries to lessen trade barriers in light of the possible recession. The economic talks at Davos should influence foreign policies concerning international commerce and restrictions on importing or exporting goods and services. “We cannot solve the problems if we focus on only one of the problems,” German economy minister Robert Habeck said.
“If none of these problems are solved, I fear, we will see a global recession — with huge implications, not only for the climate, for climate protection, but for global stability,” the German minister further explained.
The news of the GDP decreasing in G-7 countries was met with economists reacting grimly. The 0.1% decrease from last year’s figure prompted many to wonder what it meant.
In a recent visit by President Joe Biden to South Korea, the official said that recession is ”not inevitable” and there are difficult decisions to be made to ensure that its effects will be reduced to the maximum.
Zhu Ning, a professor at the Shanghai Advanced Institute of Finance, said that China is ready to make adjustments. “China still has a lot of room if it wants to — to lower interest rate, to give monetary stimulus to the economy.”
Opinions expressed by CEO Weekly contributors are their own.
