The International Monetary Fund, IMF, and the World Bank Group see a continued recovery in the global growth but at undesirably slow rates.
Following the decline in the health impact of the Covid-19 impact and subsequent reopening of economies after two years, it was expected that there would be rapid growth of the economies around the world to return to the Pre-Covid 19 levels.
However, developments like the war between Russia and Ukraine, the high and rising debt levels by poor and developing countries as well as climate change have ensured that this desired growth rate is not achieved.
IMF Managing Director Kristalina Georgieva said that unless there is a stable geopolitical terrane, global supply chains will remain disrupted and therefore expensive, with the development countries suffering most.
Georgieva and World Bank President David Malpass were exchanging views at the ongoing Spring Meetings of the World Bank and the IMF in Washington DC, USA.
She said that while the meetings cannot resolve some issues, two people could bring the challenge to an end by deciding to end what she calls a senseless war, that is Russia and Ukraine.
She says this war has affected many programs as it has diverted all attention, including the global plans to reduce the cost of debt.
Economists and western countries have blamed the war for the persistent inflation around the world mainly because of disruptions in the movement of goods, which has in turn affected investments.
To curb the inflation, governments and central banks have invoked policies that are aimed at curtailing the flow of money into economies so as to reduce demand for commodities.
As this makes borrowing expensive, it is affecting households and, especially, small and medium enterprises.This means reduced government revenues in the form of domestic revenue mobilization, as well as low trade activities.
The IMF chief says they are continuing to find solutions that will lead to low cost of debt for poor countries and SMEs, revealing a forthcoming meeting of all sovereign (government) lenders.
She also says the high inflation rates will continue impacting the cost of credit for private sector borrowers because the governments have to control it through raising interest rates.
Unfortunately, according to her, this in turn will keep economic growth low, at a forecast 3 percent for the next five years, even as consumers in major economies like the west are increasing their spending and China is opening up further.
She also called on parliamentarians to focus on legislations that tackle the emerging challenges in their countries and the world.
“Now more the ever, it is important to step up work together to deal with the full range of economic challenges we face. Parliamentarians play a key role in these efforts, enacting legislation for a resilient recovery for all.”
On his part, Malpass, the outgoing World Bank President, expressed worry at the several challenges facing the world today, adding that the poor people are the main victims.
He says, for example, that the scarcity on the market, and the high cost of farm inputs are affecting the small farmers and therefore suppressing food production in the poorer countries.
The two executives called for more collaboration among multinationals, governments and private sector organisations so that the current global challenges can be effectively handled.
Malpass also urged the countries, especially the poor and developing countries to increase the domestic revenue levels and cushion against global shocks.
However, he warned cautioned that there should be a balance between extending taxation measures to the majority who are usually the poor, and piling greater burdens to a few individuals.