IMF, World Bank sound alarm about global economic outlook

The International Monetary Fund, World Bank and others raised concerns about a worsening global outlook, while hopeful that China's reopening will help support world growth.

IMF Managing Director Kristalina Georgieva said indicators show further downgrades to global growth are likely. Speaking Friday after a meeting with China's Premier Li Keqiang in Anhui province, Georgieva said China's recalibration of its Covid policies would be a good thing for the domestic economy and the rest of the world. 

The IMF currently forecasts global growth will be 2.7% next year, slowing from 3.2% this year.

The meeting was part of the "1+6" dialogue that China holds every year with heads of the IMF, World Bank, OECD, World Trade Organization and others. 

David Malpass, head of the World Bank, was also downbeat about the global outlook.

"I'm deeply concerned that the world is at risk of a global recession," Malpass said, warning of the potential for years of slow growth and widespread asset repricing. "This is a true long-term crisis for people in developing countries." 

More needs to be done to lift the world out of stagflation, he said, adding that China as a large economy will have to reduce its excess stocks of food and fertilizer to help with shortages elsewhere.

Ngozi Okonjo-Iweala, director general of the WTO, said global trade faces real challenges and growth in trade was losing momentum. She estimated global goods trade will only grow 1% next year, a sharp slowdown from the estimated 3.5% expansion this year. 

Mathias Cormann, secretary general of the Organisation for Economic Cooperation and Development, said the global economic outlook continues to worsen. He welcomed China's easing of some Covid rules. 

Georgieva added that talks with China over debt relief for developing nations were "fruitful" and she sees potential for more systematic debt treatment going forward.