HONG KONG šC The International Monetary Fund and the World Bank held their Spring Meetings in Washington last month amid growing fears of a prolonged worldwide recession and following a series of reports predicting that global economic growth will continue to slow.
Earlier in April, a World Bank book estimated that this year and increase to 3% in 2024, before weakening to 2.2% by 2030, down sharply from the 3.5% average rate in the 2000s. The Bank foresees a ¡°prolonged period of weakness¡± for the global economy following further declines in investment and productivity.
The IMF¡¯s also warned of historically low growth, increased financial risks and a ¡°rocky recovery¡± ahead. The current wave of monetary tightening has slowed inflation but also popped several asset bubbles, triggering an interest-rate risk shock that wounded borrowers and fragile financial institutions. In one extreme (but plausible) scenario examined by the authors, higher interest rates and credit-supply shocks will pull down global growth to 1% this year.
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