International Monetary Fund (IMF) Managing Director Kristalina Georgieva says the economic crisis in Sri Lanka is a warning sign to the rest of the world.
Speaking to G20 Finance Ministers and Central Bank Governors in Indonesia today, Georgieva said that the global economic outlook has darkened significantly, and uncertainty is exceptionally high.
“Downside risks about which the IMF had previously warned have now materialized,” she said.
Georgieva said the war in Ukraine has intensified, exerting added pressures on commodity and food prices.
Global financial conditions are tightening more than previously anticipated. And continuing pandemic-related disruptions and renewed bottlenecks in global supply chains are weighing on economic activity.
As a result, later this month the IMF will project a further downgrade to global growth for both 2022 and 2023 in our World Economic Outlook Update.
“Moreover, downside risks will remain and could deepen—especially if inflation is more persistent—requiring even stronger policy interventions which could potentially impact growth and exacerbate spillovers particularly to emerging and developing countries. Countries with high debt levels and limited policy space will face additional strains. Look no further than Sri Lanka as a warning sign,” she added.
She also said that emerging and developing countries have also been experiencing sustained capital outflows for four months in a row and they now suffer the risk of reversing three decades of catching up with advanced economies and instead falling further behind.
