IMF Chief, Kristalina Georgieva, compares today with “roaring 1920s,” saying global economy risks return of Great Depression
The head of the International Monetary Fund has issued a warning that the global economy risks a return of the Great Depression. According to her, this would be largely attributed to inequality and financial sector instability.
During the Peterson Institute of International Economics in Washington, Kristalina Georgieva stated that a new IMF research comparing the current economy to the “roaring 1920s” that culminated in the great market crash of 1929, revealed that a similar trend was already underway.
She also stated that while the inequality gap between countries had closed in the last twenty years, it had increased within countries, while singling out the UK for particular criticism.
“In the UK, for example, the top 10% now control nearly as much wealth as the bottom 50%. This situation is mirrored across much of the OECD (Organisation for Economic Co-operation and Development), where income and wealth inequality have reached, or are near, record highs.”
“In some ways, this troubling trend is reminiscent of the early part of the 20th century – when the twin forces of technology and integration led to the first gilded age, the roaring 20s, and, ultimately, financial disaster,” she added.
She also warned that issues such as the climate emergency and increased trade protectionism could lead to social unrest and financial market volatility for the next decade.
“If I had to identify a theme at the outset of the new decade, it would be increasing uncertainty,” she said.
“The IMF delivered a stark message about the potential for another massive financial disaster that we last experienced during the Great Depression. With inequality on the rise and concerns of stability in the markets, we need to take this warning seriously,” Eric LeCompte, the head of debt charity Jubilee USA, said.
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