Seminar on the global economy during the Annual Meetings in Marrakech with Managing Director Gita Gopinath
Seminar on the global economy during the Annual Meetings in Marrakech
Global leaders face a bumpy road ahead, characterized by weak medium-term growth prospects, persistent inflation, geopolitical tensions, mounting debt, and higher interest rates, IMF First Deputy Managing Director Gita Gopinath told a seminar on the global economy during the Annual Meetings in Marrakech, on October 13, 2023. With countries borrowing at much higher interest rates, they will need to find alternative ways to finance their development goals and manage the green transition. Adding that countries must turn to domestic resource mobilization and seek to bolster their tax revenues.
According to the recap of the Annual Meetings on the IMF website, spotlight was the Managing Director’s call for world leaders to unlock economic opportunities for the next generation, the complex challenges facing the global economy from geopolitics to technology, how voluntary channeling of the IMF’s unique international reserve asset is benefitting countries, and regional economic outlooks for Asia, Europe, Africa and the Americas.
With interest rates higher for longer, the focus has return to fiscal and debt sustainability, noted chair of global research at JP Morgan Joyce Chang. “The bond vigilantes are back, and the Great Moderation is over.” In this complex global environment, countries should avoid protectionism and fragmentation, said WTO director general Ngozi Okonjo-Iweala. Their research shows that trade fragmentation could result in long-term losses of up to 5% of global GDP, with significant higher losses for emerging markets. She argued the issue does not lie with trade itself, but rather with the overconcentration of some supply chains.
It’s 50 years since the IMF held its Annual Meetings in Marrakech in 1973. After looking back at the past half-century of extraordinary progress and periodic upheaval, Kristalina Georgieva asked the governors of the Fund to imagine what the world would look like in 2073. Drawing on visions from artificial intelligence, and mindful of the challenges facing the global economy, the Managing Director proposed two priorities for policymakers. First, investment in strong economic foundations—notably bringing down inflation, financial stability, and transformational reforms. “The right package of reforms could boost output levels by up to 8% in four years,” she said. Second, policymakers should invest in international cooperation—particularly in areas such as debt, climate, and the global financial safety net, with a strengthened IMF at its center. While the Fund has responded to recent shocks in an agile and unprecedented way, the IMF needs to be urgently strengthened, she noted, pointing to the need to boost permanent quota resources, and replenish the subsidies that enable the Poverty Reduction and Growth Trust to provide zero-interest loans.
