IMF Director Georgieva and World Bank President Malpass warned that the risk of global recession increased with the interest rate hikes by central banks to rein in high inflation.

IMF Director Kristalina Georgieva and World Bank President David Malpass made assessments on the global economy at the virtual event held at the beginning of the annual meetings of the two institutions. IMF Managing Director Georgieva stated that high-interest rates have started to affect growth negatively.

The IMF expects approximately one-third of the world economy to contract for at least two consecutive quarters this year and next year, with a production loss of $4 trillion by 2026.

IMF President argued that strong action should be taken despite the risk of recession.

Stating that emerging economies are struggling due to tightening policies, Georgieva said, “If we act together, we can prevent the difficulties we will face in 2023.”

World Bank President Malpass also stated that the global contraction next year is a “real threat”, that the strengthening of the dollar causes depreciation in the currencies of developing countries and that the debt levels of these countries are very high.