During the spring meeting of the International Monetary Fund and the World Bank, Managing Director Kristalina Georgieva emphasized the resilience of the global economy despite challenges such as higher interest rates and conflicts in Ukraine and Gaza. However, she expressed concerns about lingering inflation and increasing levels of government debt worldwide.
Georgieva pointed out that although inflation has decreased, it remains a prominent issue, particularly in the United States where economic growth is robust but inflation is not declining as quickly as expected. She also highlighted the rise in government debts, which reached 93% of global economic output in 2020 compared to 84% in 2019 due to increased spending on healthcare and economic relief during the COVID-19 pandemic.
To address these issues, Georgieva urged countries to improve tax collection efficiency and prioritize spending on public services. She stressed the importance of building fiscal resilience to better withstand future shocks in an unpredictable global environment.
Despite the overall resilience of the world economy, growth rates remain modest compared to historical standards. Georgieva noted that global growth has averaged 3.8% over the past two decades, with current projections showing a slight increase to 3.2% for this year and the next.
One key factor contributing to sluggish global growth is the lack of significant improvements in productivity. Georgieva highlighted the need for countries to better align workers with technology and address issues such as prolonged low interest rates that have allowed uncompetitive firms to survive.
In terms of productivity gains, the United States has outperformed Europe due to its business-friendly environment and lower energy costs. Georgieva suggested that cutting bureaucratic red tape and promoting greater female participation in the workforce could help boost economic growth in other countries.
In conclusion, while the world economy has shown resilience in the face of various challenges, there are still significant concerns that need to be addressed to ensure sustained growth and stability in the future.