The global economy may face a cycle of low growth and high debt, warns the IMF Managing Director.
Photo: Debate on the Global Economy. IMF Managing Director Kristalina Georgieva; CNBC’s Sara Eisen; President of the Deutsche Bundesbank Joachim Nagel; Minister of Economy and Finance of Morocco Nadia Fettahand; Prime Minister of Poland, Mateusz Morawiecki; and Former Governor of the Reserve Bank of India, Raghuram Rajan in the green room before participating in the Debate on the Global Economy seminar during the 2023 Spring Meetings of the World Bank Group and International Monetary Fund in Washington on April 13, 2023. IMF Photo/Ariana Lindquist. [File Photo]
Photo: Shaktikanta Das, Governor of the Reserve Bank of India, and Director of the IMF Asia and Pacific Department, Krishna Srinivasan, participate in a Governor’s Talk during the 2023 Annual Meetings of the World Bank Group and International Monetary Fund in Marrakech, Morocco on October 12, 2023. IMF Photo/Sarah Silbiger. [File Photo]
Washington, DC, October 25, 2024 — A diverse assembly of journalists, policymakers, bankers, and representatives from civil society organizations has convened for the Annual Meetings of the International Monetary Fund and the World Bank in Washington, DC.
Kristalina Georgieva, the Managing Director of the International Monetary Fund, addressed the plenary session of the Annual Meetings on October 25.
The IMF Managing Director highlighted positive trends in the global economy, noting that growth is on the rise and inflation is easing. However, addressing the public’s concerns is essential, as their sentiment remains uncertain. Fostering public confidence will be vital to sustaining this economic momentum.
“The global economy has performed surprisingly well. Inflation is continuing to decline, thanks to the coordinated efforts of central banks and improvements in supply chain performance. Growth remains positive, and interest rates are decreasing. For many around the world, a soft landing seems attainable. However, despite these positive indicators, people are not feeling confident about their economic prospects,” Georgieva stated during the announcement of the annual Global Policy Agenda for the Fund.
“All participants are in attendance. What is the current state of your economy? The response indicates that it is performing well. However, what is the prevailing sentiment among your population? Regrettably, the mood is not optimistic. Many families continue to experience financial strain due to elevated prices, and global economic growth remains subdued,” Georgieva stated to reporters.
While growth is positive, it cannot help many escape poverty. Georgieva noted that many countries’ post-pandemic debt remains excessively high while productivity has stagnated.
“The bottom line is that the global economy will likely become stuck on a path of low growth and high debt. This situation may lead to lower incomes and fewer jobs, resulting in reduced government revenues. Consequently, there will be less investment to support families and address long-term challenges like climate change. These are indeed anxious times.”
Georgieva also warned that signs of fragmentation are increasing, with threats of trade actions and protectionism intensifying. This situation places trade and global cooperation at risk.
“We have ample evidence that when countries cooperate, everybody benefits. We also have ample evidence that when there is a higher uncertainty, the value of cooperation is higher,” said Georgieva, sounding optimistic.
Source: IMF
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