Ahead of the G20 finance ministers and central bank governors meeting in Gandhinagar on Monday, International Monetary Fund Managing Director Kristalina Georgieva on Thursday said the world will be looking for joint action to address rising economic fragmentation, slowing growth, and high inflation.
Agile multilateral support is vital to tackle common challenges posed by debt vulnerabilities, climate change, and limited concessional financing – especially for countries hit by shocks, not of their making, Georgieva said in a blog, ahead of her trip to India to participate in the G20 meeting.
In April, the IMF projected global growth at 2.8% in 2023, down from 3.4% in 2022. The bulk of it – over 70% – is expected to come from the Asia-Pacific region.
“Yet, recent high frequency indicators paint a mixed picture: weakness in manufacturing contrasts with resilience in services across the G20 countries and strong labor markets in advanced economies,” she said.
At the same time, financial fragilities uncovered by tight monetary policy require careful management—particularly as restoring price stability remains a priority, the IMF MD said.
“Global headline inflation seems to have peaked, and core inflation has eased somewhat, particularly in India. But in most G20 countries—especially advanced economies— inflation remains well above central banks’ targets,” she said.
The top IMF executive said it is vital to stay the course on monetary policy until inflation is durably brought down to target, while closely monitoring financial sector risks. “Here, clear central bank communication and financial sector oversight are needed to reduce the risk of disruptive shifts in financial conditions,” she said.
Tightening the purse strings after a period of pandemic-related exceptional support can support disinflation, rebuild buffers, and enhance debt sustainability, while temporary and targeted measures may be needed to help vulnerable people cope with the immediate cost-of-living crisis, she added.
The G20 last month also announced the achievement of the $100 billion in pledges of special drawing rights (SDRs) to be channeled from richer to poorer countries. Set by the G20 in the wake of the IMF’s record $650 billion allocation of SDRs in 2021, meeting this target is a strong signal of broad international solidarity, she said.