Washington, Apr 10 (EFE).- The International Monetary Fund and the World Bank on Monday began their spring meetings in Washington, a week during which the global economic situation and the challenges in these times of “great uncertainty” will be analyzed.
That is how the meetings were described in a virtual event held by IMF director Kristalina Georgieva, who added in a chat along with World Bank President David Malpass that the world finds itself in a situation where the solid recovery everyone wants is a bit difficult to achieve.
Restructuring the debt and the consequences resulting from interest rate hikes undertaken by regulators to contain inflation will be two of the main issues that will be analyzed in the coming days at different roundtable discussions and top-level meetings in which assorted economy ministers and other top economic officials from around the world will participate.
These meetings, Georgieva said, are also an opportunity to talk about immediate priorities and to reestablish price stability and safeguard financial stability, but also to discuss the prospects for long-term growth for lower icome countries.
On Tuesday, the IMF will present an update to its economic outlook and, as Georgieva said – despite increased consumption in the United States and the improvement in China’s situation after reopening after the pandemic shutdowns – global growth will remain below 3 percent and, what is of greater concern, it will stay at that level over the next five years.
That does not provide great hope for satisfying the aspirations, particularly of the poor in the poor countries.
In this regard, there are assorted challenges to deal with including “divergent” growth, meaning that the emerging markets – China and India, above all – “are doing better” but she said “I do hope that as we have these meetings to talk about the immediate pressing priorities of price stability, financial stability, we will pay more attention to how the world can go into higher growth.”
On the other hand, as a result of trade tensions between Beijing and Washington and also due to the war in Ukraine, geopolitical fragmentation “is deepening.”
She said that the IMF has conducted an investigation that revealed that the cost of trade fragmentation could reach 7 percent of global GDP in the coming years.
To that, Malpass added that trade is vital for productivity around the world, noting that it is worrying that globalization is breaking down into regional and/or protectionist blocs.
In addition, “For many of the developing countries it looks like they’re in a phase of decapitalization rather than recapitalization,” Malpass said, adding: “That’s gravely concerning.”
Another of the main challenges that will be discussed, Malpass said, is the new financial paradigm resulting from the end of zero interest rates and collateral effects such as the bankruptcies of entities such as the US Silicon Valley Bank.
As Georgieva said, the central banks are concerned about reducing inflation and that’s a basic task since without price stability there’s no solid basis for investment and growth, but she added that that task had become more complicated due to the vulnerabilities in the financial sector.
In her remarks, the IMF director said she wanted to inject a little “positivity” into the mix, stating that although it’s a “very difficult” time, “a lot” has been achieved in the past three years.
These will be the last such meetings in which Malpass will participate, having several weeks ago announced that he will leave his post at the end of June to take on other professional challenges