WASHINGTON – The International Monetary Fund (IMF) warned on Thursday that the global economy is in danger of getting stuck on a low-growth, high-debt path, urging policymakers to act on debt and carry out pro-growth reforms.
“The global economy is in danger of getting stuck on a low-growth high -debt path, that means lower incomes and fewer jobs. It also means lower government revenues, so less investment to support families and fight long-term challenges like climate change,” IMF Managing Director Kristalina Georgieva said at a press conference during the ongoing 2024 IMF and World Bank Group Annual Meetings.
Firstly, Georgieva called on policymakers to ensure that inflation gets back to target everywhere, noting that the trick now for central banks is to “finish the job of inflation without unnecessarily damaging the job market.”
Secondly, “now is the time to act on debt and deficits after years of much-needed fiscal support in response shots. Now is the time to rebuild fiscal buffers in most countries. That can be done gradually, but it needs to start now,” she continued.
Third and most important, she said, it is crucial that countries carry out pro-growth reforms from cutting red tape to improving governance, noting that IMF analysis shows that these reforms can boost output by 8 percent over four years in developing countries.
In the latest World Economic Outlook (WEO) released Tuesday, the IMF maintained its global growth forecast in 2024 at 3.2 percent, consistent with its projection in July. Growth prospects for five years from now remain lackluster, at 3.1 percent, the lowest in decades.
Advanced economies are projected to grow by 1.8 percent this year, while emerging market and developing economies will grow 4.2 percent. (Xinhua)
