IMF managing director Kristalina Georgieva recently highlighted concerns over global growth, which stands at just over 3%, marking the weakest medium-term prospects in decades. Speaking at the concluding ceremony of the third meeting of the G20 finance ministers and central bank governors in Rio de Janeiro, Georgieva emphasized the challenges of high debt, economic fragmentation, and the complexities of digital and green transitions as barriers to greater prosperity.
“The global economy must avoid getting stuck in low gear, which would lead to a more unequal and unstable world,” she said, urging countries to strengthen the foundation for robust growth and job creation through sound fiscal and monetary policies, a stable and inclusive financial system, progressive taxation, and increased support for vulnerable nations.
New IMF analysis indicates that periods of stagnation lasting four years or more tend to increase income inequality within countries by nearly 20%, presenting both a moral and ethical concern, she noted.
Georgieva stressed the importance of central bank independence, advising central bankers to resist premature easing while remaining cautious of delaying necessary actions that could dampen economic activity.
To assist vulnerable countries in meeting their development needs, Georgieva proposed a three-pronged approach:
- Implementing Reforms: Countries should reinvigorate growth and job creation, develop domestic financial markets to improve access to finance, and mobilize fiscal revenue in an equitable and sustainable manner.
- Addressing Debt Vulnerabilities: She called for resolute actions to tackle debt vulnerabilities in low-income countries (LICs), highlighting that the median LIC is currently spending more than twice as much on external debt service as a share of revenue compared to a decade ago.
Georgieva’s remarks underscore the necessity for coordinated global efforts to navigate current economic challenges and promote sustained, inclusive growth.
