By love-89.com On October 17, Kristalina Georgieva, the Managing Director of the International Monetary Fund (IMF), shared her insights on the current global economic landscape. She remarked that while inflation is steadily declining, the global economy is navigating a “soft landing.” Nevertheless, she acknowledged that growth prospects remain weak, hindered by rising trade barriers and persistent high levels of debt.
Georgieva explained that the dramatic interest rate hikes implemented by central banks worldwide in response to the inflationary pressures sparked by the COVID-19 pandemic and the Russia-Ukraine conflict have successfully suppressed inflation. Importantly, these measures have not led to a significant contraction of the global economy or a sharp rise in unemployment. She stated, “The global wave of high inflation is receding,” affirming that it hasn’t precipitated a recession or widespread job losses.
However, Georgieva cautioned that the outlook for global economic growth is “unpromising.” She pointed out that while some economies are recovering from inflation, others continue to struggle with elevated prices, which has intensified social and political discontent. “The impact of higher prices is still palpable, leaving many individuals in various countries feeling worse off and frustrated,” she noted.
As the IMF prepares for its annual meeting in Washington next week, where it will release updated economic growth forecasts, Georgieva highlighted that the IMF’s latest projections reveal a challenging future for the global economy. This is due to lackluster growth prospects, escalating trade tensions, and persistently high debt levels.
She emphasized that the interest levels on the debt accumulated during the pandemic are “daunting,” stating that even traditionally fiscally conservative parties are increasingly favoring debt-financed expenditures. IMF economists indicated that by 2030, government debt could match the total output of the global economy. If economic growth falls short of expectations or interest expenses exceed projections, government debt may surpass economic output even sooner.
Furthermore, Georgieva warned that increasing trade barriers will obstruct economic growth, describing it as “like throwing a bucket of cold water on an already sluggish global economy.” She urged that the global tensions cannot be taken for granted, and a concerted effort is needed to ease geopolitical strains.
In addition to addressing trade barriers, she believes that governments must also keep immigration channels open and strive to enhance the productivity of the existing workforce. “We are facing a world with a highly imbalanced population structure: some regions are witnessing a surge in youth populations, while others are aging rapidly,” she explained. “Economic migration can provide support, yet given the anxiety prevalent in many countries, this assistance may be limited.”
During her interview with Reuters, Georgieva also commented on China’s economic strategy. She believes that China has reached a size where it can no longer rely on exports for growth and should pivot towards a consumption-driven model. If China continues on its current path, she warned that its growth rate may fall below 4% in the medium term.