International Monetary Fund (IMF) managing director, Kristalina Georgieva, speaking at the opening of the 2024 Annual Meetings of the IMF and the World Bank Group in Washington D.C. yesterday. Picture: Supplied
International Monetary Fund (IMF) managing director, Kristalina Georgieva, has remained cautiously optimistic about global growth prospects, urging yesterday world economies to maintain the trajectory of easing interest rates.
This comes as Georgieva expressed concerns over a synchronized slowdown in global growth five years ago as the global economic landscape was been plagued by the shockwaves of the pandemic, ongoing wars in Ukraine and the Middle East, and a persistent cost-of-living crisis.
Speaking at the opening of the 2024 Annual Meetings of the IMF and the World Bank Group in Washington D.C. yesterday, Georgieva said it was imperative that we balance reflection with action.
“Amid the difficult backdrop, there are flickers of good news. Global inflation, which surged to unprecedented heights, is now on the decline. This promising trend is largely attributed to decisive monetary policies, reduced supply chain disruptions, and stabilizing food and energy prices,” Georgieva said.
“Remarkably, this has been achieved without plunging the global economy into recession or massive job losses, a fate many feared during earlier inflation spikes. The labour markets in the United States and Eurozone, for example, are cooling in an orderly manner, which is a significant achievement amidst such volatility.
“Such resilience can be traced back to robust policy frameworks and institutional foundations that countries have developed over time. International cooperation has also been vital, enabling swift, collective responses to unprecedented challenges. We draw strength from central bank independence and prudent reforms that have strengthened banking systems, creating a buffer against shocks.”
The IMF’s baseline forecast is for the world economy to continue growing at 3.2% during 2024 and 2025, at the same pace as in 2023, as global recovery is steady but slow and differs by region.
However, amidst this cautious optimism, Georgieva said the world must avoid celebratory sentiments for several sobering reasons.
“Firstly, while inflation rates may be declining, the higher cost of living remains a reality that many families continue to grapple with. This is especially true for low-income nations where the impacts of inflation are felt most acutely,” she said.
“Secondly, the geopolitical landscape presents serious concerns. The escalating tensions in the Middle East and the ongoing conflict in Ukraine threaten not only regional stability but also the global economy. The humanitarian crises that continue to unfold are heartbreaking and demand urgent attention.
“Finally, economic forecasts signal a challenging future characterised by low growth and high debt. This troubling combination poses dire implications for poverty alleviation, job creation, and sustainable investment for a green transition. As central banks navigate these treacherous waters, we must be acutely aware of how rising public debt constricts fiscal space, particularly in low-income countries struggling under heavy financial burdens.
In the face of these daunting challenges, Georgieva said it was essential to demand better outcomes. To this end, she said several critical reform areas such as job markets, capital mobilisation, and productivity enhancements, demand everyone’s immediate attention.
The IMF has already begun to enact reforms that enhance financial stability.
“Recent decisions to improve lending terms and bolster support for low-income countries underline our focus on building resilience. Our aim remains clear: to foster cooperation and generate goodwill among nations for the collective betterment of all,” Georgieva said.
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