India and China to drive half of global growth in 2023: IMF chief

The Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, warned on Thursday that the world economy is expected to grow at less than 3% this year, with India and China expected to account for half of global growth in 2023. She cautioned that the sharp slowdown in the global economy last year following the COVID-19 pandemic and Russia's military invasion of Ukraine would continue this year.

According to Georgieva, the period of slower economic activity will be prolonged, with the next five years witnessing less than 3% growth. This is the lowest medium-term growth forecast since 1990 and well below the average of 3.8% from the past two decades.

Georgieva said that while some momentum comes from emerging economies, especially Asia, India and China are expected to account for half of global growth in 2023. However, other economies face a steeper climb. The severe shock of Russia's war in Ukraine and its wide-ranging consequences led to global growth in 2022 dropping by almost half, from 6.1% to 3.4%, she added.

According to Georgieva, slower growth would be a "severe blow," making it even harder for low-income nations to catch up. "Poverty and hunger could further increase, a dangerous trend that was started by the COVID crisis," she explained.

Her comments come ahead of next week's spring meetings of the IMF and the World Bank, where policymakers will convene to discuss the global economy's most pressing issues. The annual gathering will take place as central banks around the world continue to raise interest rates to tame galloping inflation rates.

Georgieva also noted that about 90% of advanced economies are projected to see a decline in their growth rates this year. For low-income countries, higher borrowing costs come at a time of weakening demand for their exports. Georgieva added that while the global banking system had "come a long way" since the 2008 financial crisis, "concerns remain about vulnerabilities that may be hidden, not just at banks but also non-banks. "Now is not the time for complacency," she warned.