During the spring meeting of the International Monetary Fund (IMF) and the World Bank, Kristalina Georgieva, the head of the IMF, expressed concern about the global economy despite its surprising resilience in the face of challenges such as higher interest rates and conflicts in Ukraine and Gaza. While inflation has decreased, it remains a persistent issue, and government debt levels are rising worldwide. With government debts reaching 93% of global economic output last year, up from 84% in 2019, Georgieva emphasized the importance of countries improving tax collection and public spending to build fiscal resilience for future shocks.
The IMF expects global economic growth to reach 3.2% this year, with an identical forecast for 2023 and 2025. Despite the relatively stable growth, Georgieva highlighted that global growth has been weaker compared to the period from 2000 to 2019. One of the reasons for this sluggish growth is the lack of productivity improvements. Countries have struggled to effectively utilize workers and technology, with low interest rates allowing uncompetitive businesses to remain operational until inflation forced changes in 2021. Additionally, an aging workforce in many countries has impacted economic dynamism and growth potential.
The United States has experienced stronger productivity gains compared to Europe, attributed to its business-friendly environment and lower energy costs. Georgieva suggested that countries could boost their economies by reducing bureaucratic obstacles and increasing female labor force participation. Despite the challenges facing the global economy, there are opportunities for countries to address productivity issues and promote sustainable economic growth.