IMF Chief Warns of Slow and Uneven Global Recovery, Urges International Cooperation
The global economy is facing a slow and uneven recovery, according to IMF Managing Director Kristalina Georgieva. While the economy has shown resilience in 2023, the effects of the pandemic and war continue to hamper progress. Georgieva outlined these concerns during her speech at the APEC leaders’ meeting in San Francisco.
Global growth is projected to reach 3 percent in 2023 and 2024, but the medium-term growth prospects remain weak. This is below the 3.8 percent annual growth trajectory from the previous three decades. The US is the only major economy that has fully recovered, while emerging market and developing economies are still lagging behind their pre-pandemic growth levels.
On a positive note, inflation is decelerating, with headline inflation expected to fall from over 9 percent in 2022 to 4.8 percent in 2024. However, core inflation is still below target, indicating the need for central banks to remain vigilant and communicate their intentions based on data.
Financial authorities face a tough task of rebuilding buffers for future shocks while dealing with higher interest rates and supporting vulnerable populations and green and digital transformations. The world is currently in a moment of both resilience and risks.
Georgieva highlighted three key lessons learned in recent years. Firstly, the world is becoming more prone to shocks, with climate change adding to uncertainty. This calls for sound macroeconomic fundamentals and inclusive development. Secondly, slow growth is largely attributed to persistent low productivity, emphasizing the need for structural reforms and responsible use of new technologies like artificial intelligence to enhance labor productivity. Lastly, international cooperation is essential in addressing global challenges, including climate change, financial stability, and debt issues.
The recent engagement between US President Biden and Chinese President Xi Jinping is seen as a positive signal for the importance of collaboration. Georgieva expressed gratitude for their constructive interaction, emphasizing the significance of cooperation for the benefit of everyone.
International organizations like the IMF also play a crucial role in a more shock-prone world. The IMF has distributed $1 trillion in liquidity and reserves since the onset of the COVID-19 pandemic. With increased permanent quota resources, the organization is ready to face future shocks.
In conclusion, Georgieva emphasized the need for international cooperation, mentioning that the world economy and its 190 members rely on cooperation for progress. The IMF, as well as other international institutions, must remain strong and ready to tackle challenges.
