World Bank's Malpass, IMF's Georgieva See Rising Risks of Global Recession

World Bank President David Malpass speaks at the Stanford Institute for Economic Policy Research (SIEPR) on September 28, 2022 in Stanford, California. (Getty Images/AFP
World Bank President David Malpass speaks at the Stanford Institute for Economic Policy Research (SIEPR) on September 28, 2022 in Stanford, California. (Getty Images/AFP
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World Bank's Malpass, IMF's Georgieva See Rising Risks of Global Recession

World Bank President David Malpass speaks at the Stanford Institute for Economic Policy Research (SIEPR) on September 28, 2022 in Stanford, California. (Getty Images/AFP
World Bank President David Malpass speaks at the Stanford Institute for Economic Policy Research (SIEPR) on September 28, 2022 in Stanford, California. (Getty Images/AFP

World Bank President David Malpass and International Monetary Fund Managing Director Kristalina Georgieva warned on Monday of a growing risk of global recession and said inflation remained a continuing problem after Russia's invasion of Ukraine.

"There's a risk and real danger of a world recession next year," Malpass said in a dialogue with Georgieva at the start of the first in-person meetings of the two institutions since the COVID-19 pandemic.

He cited slowing growth in advanced economies and currency depreciation in many developing countries, as well as ongoing inflation concerns.

The IMF chief last week said the global lender would downgrade its forecast for 2.9% global growth in 2023 when it releases its World Economic Outlook on Tuesday, citing the shocks caused by the COVID-19 pandemic, Russia's invasion of Ukraine and climate disasters on all continents.

On Monday, she noted that economic activity is slowing down in all three major economies - Europe, which has been hit hard by high natural gas prices, China, where housing volatility and COVID-19 disruptions are dragging down growth, and the United States, where interest rate hikes "are starting to bite."

Slowing growth in advanced economies, rising interest rates, climate risks and continuing high food and energy prices are hitting developing countries particularly hard, both leaders said, calling for concerted action to help emerging markets.

Georgieva, the first IMF chief from an emerging market economy, said advanced economies needed to "get the big, scary danger of debt crisis under control" because it would affect all countries, not just those with high debt burdens.

"Not the rosy picture. But if we joined forces, if we act together, we can reduce the pain that is ahead of us in 2023."

Georgieva said the IMF will be advocating this week for central banks to continue their efforts to contain inflation, despite the negative impact on growth.

If they don't do enough, she said, "we are in trouble. ... We cannot afford inflation to be a runaway train."

Fiscal measures should be "well targeted" to ensure they did not add more "fuel to the flames of inflation."

Malpass, who came under fire last month for declining to say whether he accepts the scientific consensus on global warming, said officials at the bank were working hard to free up more funds to address climate problems facing so many developing countries.

Georgieva said the world needed a staggering $3 to $6 trillion to address climate change and it was essential to increase collaboration with the private sector and leverage funds "on scale" to help meet the needs.



Positive Outlook for Saudi Stock Market Next Week

A trader monitors the screen at the Saudi Exchange in Riyadh. (AFP)
A trader monitors the screen at the Saudi Exchange in Riyadh. (AFP)
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Positive Outlook for Saudi Stock Market Next Week

A trader monitors the screen at the Saudi Exchange in Riyadh. (AFP)
A trader monitors the screen at the Saudi Exchange in Riyadh. (AFP)

Saudi Arabia’s Tadawul All Share Index (TASI) ended the second week of March with a slight decline for the third consecutive week, closing down 0.73% at 11,725.88 points, compared to the previous week's close of 11,811.11 points.

In an analysis of the market performance during the week ending March 13, Dr. Suleiman Al-Humaid Al-Khalidi, a financial market analyst, told Asharq Al-Awsat that the market experienced a sharp decline not seen in years, coinciding with a drop in global markets, particularly in the US, where $2 trillion in value was wiped out in a single day.

This accounted for roughly 60% of the total market value of the Saudi stock market.

Al-Khalidi noted that the key player in the Saudi market is the banking sector, especially Al-Rajhi Bank's shares, which showed resilience and did not follow the downward trend. This was attributed to the strong profits reported by the banking sector in 2024.

The primary factors contributing to the market’s decline include global economic pressures, particularly US tariffs on most global economies, ongoing global uncertainty, and the Federal Reserve's tight monetary policies, he explained.

These factors have significantly impacted liquidity flows into financial markets. Additionally, fluctuations in global oil prices, despite recent stability, have also played a role.

This downturn has been accompanied by caution among sovereign wealth funds, investment institutions, and some portfolios in injecting new liquidity or altering their positions until there is more clarity in the financial markets, he went on to say.

Moreover, Al-Khalidi said that the Saudi stock market has not accurately reflected the true strength and size of the Saudi economy, which has grown to SAR 4 trillion, up from SAR 600 billion in 2016, before the launch of Vision 2030.

Additionally, the country’s GDP has reached approximately $1.1 trillion.

Looking ahead to the market's performance in the coming week, he noted that there are strong support levels at 11,550 points, followed by 11,450 points.

These levels could help shift the market toward an upward trajectory and better reflect the robust growth of the Saudi economy.

Al-Khalidi emphasized that the banking and energy sectors could play a leading role in driving the market higher, pushing the index beyond this week’s closing levels.

He also pointed out that some stocks are hitting new lows, presenting significant investment opportunities for those seeking safe havens with steady returns in the Saudi market.