Global recession can be avoided if governments’ fiscal policies were consistent with monetary policy tightening, but likely there would be countries falling into recession next year, the International Monetary Fund’s managing director Kristalina Georgieva said. In the context of monetary policy tightening, fiscal policy cannot stay idle because the cost of living crisis is hitting parts of society dramatically, Georgieva said. She said fiscal policies that indiscriminately support everybody by suppressing energy prices and providing subsidies are working against monetary policies’ purposes. “So you have monetary policy putting a foot on the brakes and fiscal policy putting a foot on the accelerator,” she said, after taking part in a conference on food security in the Saudi capital Riyadh.

Governments across the globe have stepped in to support their populations amid high food inflation and shortages by following the US Federal Reserve’s interest rate hikes, sending shockwaves through financial markets and the economy.

Earlier, a United Nations agency warned of the serious consequences of a monetary policy-induced global recession for developing countries. It called for a new strategy, including corporate windfall taxes, supply-side efforts and regulation on commodity speculation.