The International Monetary Fund (IMF) has urged states to adopt measures to restore confidence and avoid geoeconomic fragmentation, in a context in which the economy is facing “perhaps” the greatest challenge since the Second World War.
In a report presented this Monday, when the World Economic Forum starts in Davos (Switzerland), the IMF He asked the States to prioritize four measures to restore global confidence: the reduction of trade barriers; promote agreements on the debt of vulnerable countries; modernize cross-border payment systems; and face the transformation towards green energy.
At a time when the coronavirus crisis has overlapped with the Ukraine War, 2,500 world leaders have been meeting since Monday at a forum, in which the IMF has published a report, signed, among others, by the managing director , Kristalina Georgieva, explaining why and how the international community must resist geo-economic fragmentation.
TRADE RESTRICTION IN 30 COUNTRIES SINCE THE WAR IN UKRAINE
Until now with the Ukraine War 30 countries have restricted trade in food, energy and basic productsaccording to data from the fund, which has warned of the enormous cost that this disintegration can entail for the states.
Technological fragmentation alone would mean drops of 5% of GDP for some countries, according to estimates by the fund, which has cited as an example the trade tensions of 2019, which led to a drop in world GDP of almost 1%.
The cooperation that has existed during the last three decades has managed to lift 1,300 million people out of extreme povertyas the background recalls.
REDUCE TRADE BARRIERS
To restore this global trust, it has made it a priority to strengthen international trade to increase resilience, so that barriers are reduced to alleviate the scarcity of products and achieve lower food prices, among others.
In his opinion, not only countries but also companies need secure supply chains and preserve the business benefits of global integration.
Secondly, proposes agreements for the restructuring of the debt of the most vulnerable countries, which would also have a positive impact on the creditors.
45,000 MILLION A YEAR IN THE HANDS OF INTERMEDIARIES
On the other hand, the IMF proposes that modernize cross-border payment systemstaking into account that the average international cost of transfers is 6.3%, which means, according to their data, that 45,000 million dollars a year end up in the hands of intermediaries.
Finally, it has raised another priority, the most important of all, which is to address climate change and the urgent need to accelerate the transition to energy.
The IMF recognizes that there is no magic formula to restore global confidence, but adds that if the parties show interest in solving the most urgent common needs, it will be possible to weave a stronger and more inclusive economy.
This organization has recalled that the advantages of acting together were revealed during the pandemic, when governments took coordinated fiscal and monetary measures to prevent another great depression and to develop vaccines in record time.
This IMF report is made public before giving trade when the interventions of the world economic forum have not yet started, which will be held until Thursday where the leaders of politics, business and civil society discuss economic challenges, again in face-to-face after the pandemic.
(with information from EFE)
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