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“Had it not been for this shock, we would have been upgrading
global growth,” Georgieva said in remarks before next week's
IMF-World Bank spring meetings. "But now, even our most hopeful
scenario involves a growth downgrade.''
The world economy had proved resilient in the face of President
Donald Trump's decision to impose sweeping taxes last year on
imports from most the world's countries. In January, the
191-country IMF had upgraded the global growth outlook to 3.3%
and was poised to do so again when its new forecasts came out
next Tuesday.
But the war, which began Feb. 28, changed everything. The
conflict has driven up the price of oil and natural gas; damaged
oil refineries, tanker terminals and other energy
infrastructure; disrupted shipments of fertilizer the world's
farmers depend on; and damaged the confidence of businesses and
consumers.
The United States and Iran announced Tuesday they'd reached a
ceasefire — after Trump warned that otherwise "a whole
civilization will die tonight.''
Still, Georgieva said Thursday that "growth will be slower —
even if the new peace is durable.''
Sub-Saharan Africa and small island countries are most
vulnerable to the energy shock, Georgieva said. Around the
world, governments have only a limited ability to support their
economies with spending increases and tax cuts because their
debts are already so high.
She noted that many countries have taken steps to limit the
damage from the energy shock such as urging or requiring people
to work from home; encouraging more use of public
transportation; and limiting travel by public officials.
Georgieva pleaded that policymakers “be careful not to make
things worse'' with ”go-it-alone'' moves such as limiting
exports and imposing price controls. "Don’t pour gasoline on the
fire,'' she said.
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