The head of the International Monetary Fund highlighted concerns about the global economy's resilience in the face of various challenges. Despite facing higher interest rates and geopolitical tensions, the world economy has shown unexpected strength. However, there are still significant issues to address.
One major concern raised was the persistence of inflation. While inflation has decreased, it remains a worry, particularly in the United States where efforts to lower it have been slower than anticipated. Additionally, government debts worldwide have been on the rise, reaching 93% of global economic output last year.
The IMF chief emphasized the importance of countries improving tax collection and public spending efficiency to build fiscal resilience. This is crucial for preparing for future economic shocks that may arise.
The IMF's latest forecast predicts global economic growth of 3.2% for this year, with similar projections for 2023 and 2025. While the economy has shown resilience, growth rates remain below historical averages.
One factor contributing to sluggish global growth is the lack of significant productivity improvements. Countries have struggled to effectively leverage technology and labor, leading to suboptimal growth. Low interest rates in recent years have also propped up uncompetitive firms, hindering overall economic dynamism.
The aging workforce in many countries has further dampened prospects for faster economic expansion. However, the United States stands out for its relatively stronger productivity gains, attributed to favorable business conditions and lower energy costs compared to Europe.
Georgieva suggested that countries could boost their economies by streamlining regulations, fostering innovation, and increasing female workforce participation. These measures could help address some of the underlying challenges affecting global economic growth.
