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Georgieva calls for cooperation against conflicts and protectionism | Economy

Georgieva calls for cooperation against conflicts and protectionism | Economy

The world economy has resisted “extraordinarily well” the episode of high global inflation. “The soft landing is in sight,” the managing director of the International Monetary Fund (IMF), Kristalina Georgieva, insisted this Thursday in Washington. However, the world risks being stuck in a situation of low growth and high debt, he warned. The head of the international organization has called on the international cooperation in the face of risks derived from geopolitical conflicts and growing protectionism.

Georgieva has highlighted the dissonance between the good macroeconomic figures and the situation of the population. “Families continue to suffer from high prices and global growth is anemic,” he said. The IMF expects the world economy to grow 3.2% this year and slow down to 3.1% annually on average over five years. These are the lowest medium-term prospects in decades and trade is no longer a powerful engine of growth: “We live in a more fragmented global economy,” said Georgieva.

While, Public debt is on track to exceed $100 trillion this year, a historical maximum that is equivalent to 93% of the world’s gross domestic product (GDP). The IMF predicts that by 2030 it will approach 100% of GDP. “The global economy is at risk of stagnating on a path of low growth and high debt. This means lower income and fewer jobs. It also means less public income, and, therefore, less investment to support families and fight long-term challenges such as climate change,” warned the managing director of the Fund.

The managing director of the IMF, Kristalina Georgieva, at the press conference this Thursday.
The managing director of the IMF, Kristalina Georgieva, at the press conference this Thursday.Kaylee Greenlee Beal (REUTERS)

Georgieva has presented the IMF’s global agenda, which coincides with the recipes anticipated these days by its economists. The objective is twofold: to ensure a soft landing and get off the path of low growth and high debt. And to this end, it advocates a triple turn in economic policies that is summarized in loosening monetary policy, tighten fiscal policy without hindering growth too much (“this can be done gradually, but we have to start now,” he said) and address structural reforms that boost productivity.

As head of an economic organization that, after the incorporation of Liechtenstein, has 191 members, Georgieva has called for international cooperation as a recipe against the threats arising from wars, geopolitical conflicts and economic protectionism. “Debt, trade, climate change and technology are triggering transformations in the global economy that require a global response. Only by working together can we take advantage of the opportunities and mitigate the risks of these major changes on debt,” he said.

“We have ample evidence that when countries cooperate, everyone benefits. We also have ample evidence that when there is greater uncertainty, the value of cooperation is greater,” the head of the Fund insisted.

In reports released this week, The organization warns of the drag on global growth that a trade war would mean. The Republican candidate for the United States presidential elections, Donald Trump, proposes establishing tariffs in general of 10%-20% and in the case of China, 60%, which would probably trigger retaliation and end up hurting everyone. That is the great fear of many of the economic officials present these days in Washington, but there were no questions about the elephant in the room at Georgieva’s press conference this Thursday.

The managing director of the Fund has spoken about China. In the absence of a more detailed study, it has positively valued the latest measures taken by the Government to boost the economy. He has asked China to bet more decisively on domestic consumption as an engine of growth and has applauded that the authorities recognize that, in the short term, a major obstacle is in the real estate sector. “Decisive action to resolve it would help raise consumer confidence,” he said.

Regarding the large economies of Latin America, he has called for ambition to undertake reforms that promote growth, which for now is being “disappointing.” He has asked large countries to learn from some smaller ones in the Caribbean. “If we take a country like Barbados or Jamaica, the reforms are giving results, because they have taken seriously the importance of governance and involving public opinion to carry out the reforms,” he said.

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