The war between Israel and Palestine is a new cloud that darkens the horizon. In a sky that was already dark. The managing director of the International Monetary Fund (IMF), Katalina Georgieva, has used metaphors to describe the current economic situation, in the meeting these days that the organization is having in Marrakech. She has warned that the worsening geopolitical situation occurs at a time of weakness in the global economy. “I don’t know when the next clash will come. But I know it will come. Civil clashes have become the new normal.”
The Bulgarian economist recalled that since the pandemic, economic divergences have increased, with countries recovering before others, the world has fragmented and growth has weakened. According to her calculations, some 3.6 trillion dollars have been lost since Covid. But the problem is that now growth has fallen below its potential, making it “insufficient” to face the multiple shocks they are experiencing.”
In his opinion, the priority has to be the fight against inflation, in a context in which it will be necessary to assume that “rates will remain at high levels for longer.” This will mean that financial stability will have to be closely monitored. It will also be necessary to better focus fiscal spending to rebalance the budgets of highly indebted economies.
For Georgieva it will be essential to try to recover a certain global consensus. “Let’s not fall into the temptation of pointing the finger at someone,” she said after commenting on the uncertainties that are being experienced in the Middle East. “Eliminating the common framework would return us to a much less predictable environment.”
