The Managing Director of the IMF stated that despite significant progress in the global economic recovery, there are still two major obstacles ahead...
The International Monetary Fund (IMF) Managing Director warned on Thursday that high debt and low growth remain the main obstacles to the global economy.
In an interview, IMF Managing Director Kristalina Georgieva said that although there has been significant progress in the global economic recovery, governments have become accustomed to borrowing, and "weak growth" has exacerbated the challenge of repaying debt.
She said, "It's not time to celebrate yet. When we look at the challenges ahead, the biggest challenges are low growth and high debt. This is where we can and must do better."
Georgieva praised the work of major central banks in controlling inflation, but she pointed out that these achievements are not universal, and some economies are still struggling with high inflation, which exacerbates social and political discontent.
She said, "What has been truly successful are the major developed economies... and there are still places in the world where inflation remains a problem. The impact of high prices is still present, making people in many countries feel a decline in living standards and feel angry."
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These remarks were made as finance ministers and central bank governors from various countries will meet in Washington, D.C. next week for the 2024 IMF and World Bank Annual Meetings. They will discuss topics such as the global economic outlook, poverty eradication, and the transition to green energy.
Georgieva warned that international trade will no longer be the "growth engine" it once was, emphasizing the surge in restrictive policies in many economies.
She said: "We have seen some 'closed policies' in the United States and elsewhere, where they believe that globalization has not benefited them; their jobs have disappeared, their communities have been neglected, and for security reasons—mainly stemming from the pandemic and the Russia-Ukraine conflict. All of these have put national security priorities on the agenda. All of these are indeed creating a more distrustful environment, and now it is the developed economies, not the emerging markets, that are leading the implementation of industrial and protectionist measures."
The IMF Managing Director had previously warned against implementing such restrictive measures, stating in June that the increasing "fondness" of some politicians for restrictive measures such as tariffs is harming international development.On Thursday, she once again emphasized this message, insisting that "retaliatory" trade measures could cause the same degree of harm to both the implementers and the targeted countries.
She said, "Our advice is to carefully weigh the costs and benefits, as well as what this might mean in the medium term. Of course, we also do our part to calculate the costs and benefits, and to show who bears these costs, because tariffs are usually borne by businesses and consumers in the countries that impose the tariffs."
Georgieva also pointed out earlier on Thursday that broader geopolitical tensions are one of the main risks to global financial stability.
In her opening remarks, she said, "We are all very concerned about the escalation of conflicts in the Middle East, and the instability it may cause to regional economies and the global oil and gas markets."