The sharp rise in inflation could be an obstacle to the economic recovery from the corona crisis. Poorer countries and households are particularly affected by rising food and energy prices, warned Kristalina Georgieva, the top woman of the International Monetary Fund (IMF).
The UN Financial Stability Organization will therefore be lowering growth expectations for the global economy at its upcoming autumn meeting, she already announced.
In her speech at the Bocconi University in Milan, Georgieva pointed out that emerging economies are less likely to bounce back from the blow of the corona pandemic than rich countries. This is in large part because these countries can obtain far fewer vaccines against Covid-19. Therefore, she again called for more support from richer countries to vaccinate larger parts of the world’s population against corona.
On top of the vaccine scarcity, there are also the substantial price increases of recent months. Food has become 30 percent more expensive. “Together with increased energy prices, this puts further pressure on poorer families,” Georgieva said.
At the same time, governments worldwide have taken on more debt to deal with the crisis with support measures. But interest rates can also rise in the wake of inflation. This hurts especially the countries with high public debt because loans are becoming the most expensive for them. According to Georgieva, governments must therefore strike a good balance between the necessary economic support and deleveraging in the future.
In her speech, the IMF chief did not say anything about the controversy that has arisen over her. As a senior executive at the World Bank, Georgieva is accused of exerting pressure to make China perform better in a ranking for countries with an attractive business climate. She herself strongly denies those allegations, but the IMF has decided to investigate the matter thoroughly.