IMF chief urges policymakers to ‘deal decisively with inflation and debt’
With a global growth outlook well below the historical average, and a growing divergence in economic fortunes, the head of the International Monetary Fund (IMF) on Thursday urged policymakers to deal decisively with inflation and debt, and promote economic transformation.
“The global environment has become more challenging. Geopolitical tensions increase the risks of fragmentation of the world economy,” IMF Managing Director Kristalina Georgieva (pictured) said in a speech at the Atlantic Council, ahead of the 2024 Spring Meetings of the IMF and the World Bank Group (WBG).
Referring to global economic activity as weak by historical standards, Georgieva said the global output loss since 2020 is around 3.3 trillion dollars, with the costs disproportionately falling on the most vulnerable countries. Georgieva highlighted a growing divergence within and across country groups. Among advanced economies, the United States has experienced the strongest rebound, helped by rising productivity growth.
Productivity growth
By contrast, activity in the euro area is recovering much more gradually, reflecting the lingering effects of high energy prices and weaker productivity growth, the IMF chief said. “But the most striking divergence is for low-income countries for whom scarring has been the most severe.
Among these nations, fragile and conflict-affected economies are bearing the heaviest burden,” she said. The first thing for policymakers, according to Georgieva, is to bring back price stability. In the final quarter of 2023, headline inflation for advanced economies was 2.3 percent, down from 9.5 per cent just 18 months earlier.
