US economic growth 'unlikely to last', IMF Managing Director says
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At the annual EU budget conference, IMF Managing Director Kristalina Georgieva discussed several issues and called for a green energy industry in Europe.
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International Monetary Fund Managing Director Kristalina Georgieva speaks during a news conference at the World Bank/IMF Spring Meetings at the International Monetary Fund (IMF) headquarters in Washington, Friday, April 19, 2024 (AP)
The US economic growth is "unlikely to last", IMF Managing Director Kristalina Georgieva warned today.
At the annual EU budget conference, she said, "Our World Economic Outlook shows the global economy converging back to a rather weak trend rate of growth. Yes, the US economy still looks like it’s firing on all cylinders, but that is unlikely to last."
European Central Bank
Georgieva also said that even though the European Central Bank's (ECB) tight monetary policy to combat inflation is working, it is still too soon to announce victory.
"After a global burst of inflation to levels many people have never seen in their lifetimes, it looks like the ECB’s tight monetary policy is doing its work," she stated emphasizing that even though it looks promising, it is not time for celebrations yet.
"It’s not over yet. But, yes, it looks promising: inflation down from its disturbingly high peaks and no deep recessions in Europe," Georgieva emphasized adding that the "last mile can be the hardest," while pointing out that major central banks in Europe will stop walking in lockstep like they have been amid recent rate hikes.
Georgieva added that some change rate movements could accompany the upcoming divergence in interest rates.
Price shocks and energy
Addressing the price shocks in Europe, the IMF managing director said that until the EU's dependence on important energy is decreased, it will stay vulnerable to this kind of shock.
"As the recent gas-supply shock showed, as long as Europe is dependent on imported fossil fuels, it will remain vulnerable," Georgieva said while also mentioning that fossil-fuel EU imports have doubled and surpassed 5% of GDP in 2022.
To enhance energy security, she emphasized that the best solution for Europe is to develop a green energy industry adding, "No one can shut off the wind or the sun!"
By the end of this month, the fund will give its recommendations for how the EU can better its regional energy security by implementing a climate action plan, Georgieva declared.
Previously on... IMF warnings
Alfred Kammer, the director of the IMF European Department, emphasized on April 19 the importance of ensuring legal justification for any actions aimed at seizing Russia's frozen assets to prevent potentially undermining the global financial system.
Since the onset of the war in Ukraine in 2022, the EU and other G7 nations have collectively frozen around $300 billion in assets belonging to the Russian central bank. Among these assets, approximately €196.6 billion is being held by the Belgium-based clearinghouse Euroclear. What is significant, is that over the past year, these funds have accrued nearly €4.4 billion in interest.
"With regard to the seizure of Russia’s assets … our view is that is something for the relevant jurisdictions and courts to determine and to decide," Kammer told a press briefing on April 19, adding, "From our side, what is important is that whatever action is taken, that the implications of the functioning of the international monetary system are being taken into account."
Kammer, reiterating the IMF’s previous statements on the issue, recalled IMF Managing Director Kristalina Georgieva’s words, that "one needs to be wary of unintended consequences" of such actions.
"And again, this is the issue of a multilateral rules-based system and a well-functioning international monetary and financial system, which we all should be respectful for because it delivered… prosperity over last decades," Kammer reaffirmed.
