The managing director of the International Monetary Fund, Kristalina Georgievaaffirmed on Sunday that risks to financial stability have increased and called for vigilance to continue, although he stressed that the measures adopted by advanced economies have calmed the tension in the markets.
The boss of the IMF reiterated his opinion that 2023 will be another difficult yearwith global growth slowing below 3% due to the aftermath of the pandemic, the war in Ukraine and monetary tightening.
Even with better prospects for 2024, global growth will remain well below its historical average of 3.8% and the overall outlook will remain weak, he told the China Development Forum.
The IMF, which has forecast global growth of 2.9% this year, is scheduled to publish new forecasts next month.
Georgieva said that monetary policy makers in advanced economies had responded aggressively to risks to financial stability following bank collapses, but vigilance was still needed.
“We continue to closely monitor developments and assess potential implications for global economic prospects and financial stability,” the official said, adding that the IMF was paying special attention to the most vulnerable countries, particularly low-income ones. with high levels of debt.
He also warned that geo-economic fragmentation could divide the world into competing economic blocs, leading to “a dangerous divide that would leave everyone poorer and less secure.”
Georgieva said China’s strong economic rebound, with expected GDP growth of 5.2% in 2023, offers some hope for the economy, as the Asian giant is expected to account for around a third of global growth in 2023.
The IMF estimates that each percentage point increase in GDP growth in China translates into a 0.3 percentage point increase in growth in other Asian economies.
He urged Chinese monetary policy makers to work to increase productivity and rebalance the economysteering it away from investment and toward more durable consumption-led growth, including through market-oriented reforms to level the playing field between the private sector and state-owned enterprises.
According to Georgieva, these reforms could raise real GDP by up to 2.5% in 2027 and around 18% in 2037.
The official said rebalancing China’s economy would also help Beijing meet its climate goals, as a shift to consumption-led growth would cool energy demand, reduce emissions and ease pressures on energy security.
Thus, carbon dioxide emissions could be reduced by 15% in the next 30 yearswhich would mean a decrease in world emissions of 4.5% in the same period.
(With information from Reuters)
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