He International Monetary Fund (IMF) and the World Bank (WB) start their annual meetings, which come in a turbulent time of international conflictsfragmentation, low growth and debt high, in which it is more necessary than ever for governments to act so that the forecasts improve.
This was stated a few days ago by the leaders of both institutions of Bretton Woods, Kristalina Georgieva and Ajay Banga.
In her traditional speech prior to these meetings, the managing director of the IMF He warned on Thursday of a “difficult future” due to low growth and high debt and urged governments to work to reduce it and “rebuild the buffers for the next shock, which will surely come,” perhaps sooner than expected.
From today until Friday, high-level presentations and meetings will be held at the headquarters of both institutions with the participation of ministers, presidents of central banks and others economic authoritieswho will discuss the state of the world economy and future challenges.
He IMF will also present several economic reports. Among them, on Tuesday it will publish the update of its global economic outlook (the report WEOfor its acronym in English).
Georgieva He announced that it will be seen that “China is slowing down,” that “the India and other parts of Asia are accelerating” and that USA is doing “pretty well, while Europe can do better.”
According to the latest forecasts published in July, the global economy will grow 3.2 percent this year and 3.3 percent next year, poor levels that will be maintained in the medium term.
And, according to Georgievaalthough the global inflationary crisis has been overcome without entering a recession, there is little to celebrate.
“Don’t expect victory parties next week,” said the Bulgarian economist, who expressed her hope that policymakers will leave Washington “so scared” as to go “to work at full speed.”
Public debt, the big problem
One of the main topics of these meetings will be the excessive public debt and the increase in the deficit. On Wednesday the IMF will present an update of its Fiscal Monitorin which it will update global and regional estimates.
Last week the IMF offered a preview of the report and warned that global public debt will exceed $100 trillion or 93 percent of global gross domestic product by the end of this year, and will approach 100 percent of GDP by 2030. This represents 10 percentage points of the GDP more than before the pandemic (2019).
These forecasts come in a context of concern “over the growing conflict in the Middle East and its potential to destabilize regional economies and global oil and gas markets,” he said. Georgievaand with governments concerned about increasing their defense spending and betting “on protectionism.”
Despite the current gloomy outlook, Georgieva recalled that, as his counterpart says in the World Bank“forecasts are not destiny” and it is in the hands of governments to do much more.
Tax reforms are necessary, which “are not easy” or popular, as well as labor market reforms. Also changes to eliminate barriers that prevent the mobilization of capital and carry out policies to improve productivity, reduce bureaucracy, harness the power of artificial intelligence or boost spending on education, research and development.
Time to act, not to regret
From the World Bank They also face the event as an opportunity to signal the sense of urgency to act to reverse the situation and avoid a worse scenario.
In a press conference held last Thursday, Banga He stated that the meetings should serve not so much to contemplate the problems but to see what multilaterals and governments can do to improve the situation.
“Every time we look back five or ten years we see that there have been very difficult circumstances in the world, but clearly we always find a way to overcome them,” he said.
The meeting occurs coincidentally two weeks before USA celebrate its presidential elections, in which the Democrats will face Kamala Harris and the republican donald trumpa topic that will probably sneak into the hallways since its result will be decisive for the world economy in the short term.
The institutions prefer not to talk about the issue. The World Bankhe pointed out Bangadoes not spend time “speculating” about something whose outcome is unpredictable.
M.R.A.
