Speaking ahead of the Annual Meeting of the International Monetary Fund (IMF), Bundesbank Vice-President Claudia Buch said that developments in the global economy had reached a turning point. “Cyclical risks and high inflation are weighing on markets, while geopolitical developments and combating climate change require structural adjustments,” Ms Buch explained. The global financial system had weathered the recent crises relatively well, she continued, not least on account of the reforms of the past decade. However, vulnerabilities in the financial system remained high. Furthermore, there was a possibility that “macroeconomic and geopolitical risks are being underestimated”, and “negative shocks could put international financial markets under pressure.”

Claudia Buch also warned that private and public debt had swelled again significantly since the pandemic, which meant that negative shocks could jeopardise debt sustainability. “Building resilience should be a priority for all involved,” Ms Buch said. International debt restructuring initiatives, such as the Common Framework for Debt Treatments, could help with this.

Outlook for the global economy

The IMF governors of all member states will gather for the Annual Meeting of the IMF and the World Bank, which is to take place in Washington DC in mid-October. As part of its Annual Meeting, the IMF will also issue its World Economic Outlook (WEO) , in which it presents its forecasts for global economic development. The IMF continues to expect growth of 3.2% for the current year; however, global growth expectations for the coming year have been lowered to 2.7% compared with the July 2022 forecast.

A prominent topic of the conference will therefore also be how to support those countries most affected by the economic impact of the war and, in particular, the rise in food prices. “During the COVID-19 pandemic, the IMF demonstrated its ability to respond to crises quickly and flexibly,” Ms Buch said. A new IMF programme, known as the “Food Shock Window”, is designed to help vulnerable economies cope with the severe disruptions in the international food markets.