(Bloomberg) -- The International Monetary Fund and World Bank warned of the rising risk of a global recession as faster inflation forces central banks to raise interest rates, crimping growth.
Higher borrowing costs are “really starting to bite,” IMF Managing Director Kristalina Georgieva said alongside World Bank President David Malpass at a virtual event on Monday kicking off the annual meetings of their institutions.
The IMF calculates that about one-third of the world economy will have at least two consecutive quarters of contraction this year and next, and that the lost output through 2026 will be $4 trillion.
At the same time, policymakers can’t let inflation be a “runaway train,” Georgieva said.
Malpass warned that there’s a “real danger” of a worldwide contraction next year, and that dollar strength is weakening the currencies of developing nations, increasing their debt to “burdensome” levels.
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