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Even if the global economy somehow manages to avoid a recession, in 2023 millions of people around the world will suffer as if a recession has taken place, Kristalina Georgieva, managing director of the International Monetary Fund (IMF), said in a 21 September Bloomberg interview.
“Increased interest rates will bite and we will see the impact on growth,” she predicted. “For hundreds of millions of people, it will feel like a recession so buckle up.”
Central banks around the world have raised interest rates and continue to do so, which bodes poorly for consumer spending, especially on big-ticket items such as homes and cars.
When spending slumps, workers lose their jobs.
Also, the U.S. Federal Reserve’s steadily rising interest rate has strengthened the U.S. dollar’s value, which has hiked the cost of imported food and, especially, oil and natural gas for dozens of countries.
The stronger dollar and higher interest rates also make it harder for emerging nations to service their dollar-denominated debt.
There is “no doubt” the IMF will soon open a financial “food shock window” to aid countries slammed by higher food prices resulting from disruptions of grains and other shipments out of Ukraine and Russia because of the war and resulting Western sanctions.
The fund also is considering an additional massive aid package for Ukraine, similar to the $1.4 billion the IMF gave the country last March, days after Russia invaded it, Bloomberg reported.
Ukraine applied to the IMF for a new loan in August and hopes to receive another tranche of money by early November.
Ukraine’s finances are falling short by as much as $5 billion a month, Bloomberg said, and the country needs to repay the IMF $4 billion by the end of next year.
TREND FORECAST: First there is the arrogance of the IMF chief’s statement that “For hundreds of millions of people, it will feel like a recession so buckle up.”
“Buckle up”? You mean get ready to suffer as you can’t make ends meet and life becomes more miserable? But not for the IMF head whose net worth is believed to be $7 million and she makes $351,758 annually from the IMF.
And, we maintain our forecast for a deep recession in most nations as Dragflation spreads across the globe.