By Andrea Shalal

WASHINGTON (Reuters – International Monetary Fund chief Kristalina Georgiaeva stated Tuesday that the IMF expects the global economy to grow slightly less than its July projection of 6%. This was based on risks such as debt and inflation.

Georgieva stated that the world economy is recovering, however, the Pandemic continues to hinder its recovery. The main problem was the “Great Vaccination Divide”, which has resulted in too few countries having access to COVID vaccines.

Georgieva gave a virtual speech to Bocconi University in Italy. He said the updated World Economic Outlook for next week would predict that advanced economies will return to pre-pandemic levels, by 2022. But, many emerging and developing nations need “many additional years” to recover.

We face a worldwide recovery that is still hampered by the impact of the pandemic. We are unable to walk forward properly — it is like walking with stones in our shoes,” she said.

Georgieva stated that the United States and China remain vital growth engines, while Italy and Europe are showing greater momentum. However, growth is slowing in other areas.

She said that inflation pressures in many countries will ease in 2022. However, they could continue to impact some developing and emerging economies.

Although central banks may not need to tighten for the time being, they must be prepared to respond quickly if there is a rapid recovery, or a risk of inflation rising, said Sherry.

Her advice was to be aware of financial risks and evaluate stretched asset values.

Georgieva stated that the global debt level, currently at around 100%, means many developing countries have very limited options to issue debt under favorable terms.

She encouraged richer nations and other countries to improve delivery of COVID-19 shots to developing countries and remove trade barriers.

She said that if the huge gap between the vaccination rates of advanced and less developed countries is not closed, it could hinder a global recovery. This would result in a cumulative loss of $5.3 trillion in global GDP over five years.

Georgieva suggested that all countries need to accelerate their efforts in addressing climate change, ensuring technological change, and encouraging inclusion. This could increase economic growth.

According to her, a switch towards renewable energy and new networks of electricity, as well as energy efficiency and low carbon mobility, could boost global GDP by approximately 2% over the next decade. It would also create around 30 million jobs.