Managing Director of the International Monetary Fund Kristalina Georgieva warns that a cold war could flare up between the US and China in the near time. In her interview with The Washington Post, the policymaker pinpointed the reasons for such fears and analyzed developments in the global economy.
From her viewpoint, the joint efforts made by the US and its European allies to ensure a long-lasting economic partnership could be in jeopardy. The reason is the rearrangement of established supply chains which fell into dependence on a single supplier, China, after the COVID-19 pandemic.
Kristalina Georgieva is worried that Washington and Beijing will build new trade barriers to gain an advantage in their geopolitical rivalry in the international arena. If such a scenario comes true, these two largest global economies “could set off a destructive cycle that would hurt middle-class and poor households while leaving the wealthy unscathed,” the IMF leader said.
Moreover, “My concern is a deepening fragmentation in the world economy,” the policymaker confessed. “I lived through the first Cold War on the other side of the Iron Curtain. And, yeah, it is quite cold out there,” Kristalina Georgieva said. “And to go in a second cold war for another generation is … very irresponsible.”
Earlier, World Bank President David Malpass and the IMF head shared the short-term outlook for the global economy which is likely to slip into a recession in 2023.
