IMF chief says lack of economic unity will cost 7% of global GDP

Asking the world to be pragmatic and collaborate, IMF chief Kristalina Georgieva on Friday said fragmentation can cost up to 7 per cent of the global GDP.

"If we don't unite now, we'll face significant risk to the economy and people's wellbeing," she said during a session on global economy on the last day of the World Economic Forum Annual Meeting 2023.

The International Monetary Fund Managing Director said if we look at medium-term growth prospects, how we handle the supply chain issues, that will decide our future prospects. She said her message to the world is to "be pragmatic and collaborate".

Asked what will take the IMF to upgrade its global growth forecast, she said, "Last year, we downgraded the growth projections three times and not downgrading further itself is good news at the moment." Also, the labour market needs to be looked at seriously, as for anyone, having a cost of living crisis and a job is much better than having no cost of living crisis and no job, she said.

"2022 was a weird year. There was no growth engine. But some things must be improving now or at least it has not been as bad as feared," ECB President and former IMF chief Christine Lagarde said.

China is now emerging again and that would be positive for the rest of the world also, though that may lead to some inflationary pressures, she added.