© Reuters / Yuri Gripas
The world economy is still set to expand in 2022, though by less than the 4.4% previously anticipated, Georgieva said in an interview with Foreign Policy magazine broadcast Tuesday. The IMF is set to update its projections in April when the fund holds its annual spring meetings.
"Some economies that have been fast to recover from Covid are in a stronger position" to cope with the reverberations from Russia's invasion of Ukraine, Georgieva said. The U.S. in particular has "fairly strong fundamentals," she said.
Comment: Claiming the US has 'strong fundamentals' reflects just how deluded (or deceptive) those at the IMF are.
"But those that were not yet coming out of the Covid crisis, that were falling further behind, they're going to be hit even harder," with the "possible risk of recessions."
Tighter financial conditions, as the Federal Reserve and other developed-world central banks raise interest rates, will be a "big shock" for many countries, according to Georgieva. About 60% of low-income countries are in "debt distress' or close to it, double the number that the IMF was worried about back in 2015, she said.
Georgieva's top deputy, Gita Gopinath, said in the same event that the IMF sees "increasing fragmentation" in global payments systems as one consequence of the war.
Comment: As a consequence of US warmongering and the West's attempts to contain Russia and China: Can India facilitate the Global South's alternative financial transactions with Russia?
Dollar's Role
The U.S. dollar isn't about to suffer an "imminent demise" as the dominant currency in the global financial system, but "we could see pockets where we might see shifts happening," Gopinath said.
Comment: It's likely that the international community will assist the US hegemon in a controlled collapse rather than the world suffer the blowback of sudden implosion.
"We are likely to see some countries reconsidering how much they hold of certain currencies in their reserves," while it's clear that the way energy is traded has changed "forever."
Comment: Indeed, and likely for the better: Putin flips sanctions, demands rubles for Russian gas from 'hostile' countries, says credibility of dollar and euro is 'destroyed'
Depending on how long the war lasts, there could be larger effects, Gopinath said, though she described the potential impact of a Russian debt default as limited and "not a systemic risk to the global economy."
Comment: The US is more likely to default, they're on their 4th round of Russian sanctions and it is the West that's is desperate for everything, from fertilizer to oil.
The fund is also monitoring how the war affects use of cryptocurrencies, and expects an acceleration in the development of central-bank digital currencies, Gopinath said. Both she and Georgieva said more work is needed to strengthen regulations in this area.
Comment: It's hardly a prediction when digital currencies have been in the works for years in some countries.
Georgieva said the IMF has "three-quarters of our $1 trillion of lending capacity available" to help countries cope with the risks.
Comment: The IMFs insidious 'loans'; loans which in part created the conditions for the chaos we see in Ukraine today:
She also said that the fund will do its "part" for Ukraine when the war ends and reconstruction begins. The country's economy may shrink by a third compared with before the war, she said.
Reader Comments
They are using the war to blame the crash of the economy and the end of the U.S. petro dollar that is going to default back to zero. Phase one was covid now on to phase two.
NATO now on Russia’s borders. You won’t find that info on MSM