International Monetary Fund Managing Director Kristalina Georgieva said Thursday that while the global economy has proven surprisingly resilient despite rising interest rates and the shocks of the wars in Ukraine and Gaza, “there is plenty to be concerned about,” including persistent inflation and rising government debt. “Inflation has gone down, but it’s not gone away,” she told reporters at the spring meetings of the IMF and its sister organization, the World Bank. In the United States, she said, “the flip side of unexpectedly strong economic growth” is that “it’s taking longer than expected to bring inflation under control.”
Need a loan? Get cash against your mutual funds in 4 hours Georgieva also warned that government debt was rising around the world. Last year, government debt reached 93% of global economic output. That’s up from 84% in 2019, before the response to the COVID-19 pandemic forced governments to spend more on providing health and economic support. She called on countries to collect taxes and spend public funds more efficiently. “In a world of continuing crises, countries need to urgently build fiscal resilience to prepare for the next shock,” she said.
The IMF said on Tuesday it expects the global economy to grow 3.2% this year, a slight upward revision from its January forecast but unchanged from 2023. It also sees 3.2% growth continuing into 2025, marking the third consecutive year of growth.
The global economy has proven unexpectedly resilient, but remains weak by historical standards: global economic growth averaged 3.8% from 2000 to 2019.
Georgieva said one of the reasons global economic growth has slowed is disappointing productivity gains. Countries have not been able to figure out how to most efficiently combine workers and technology, and years of low interest rates that only ended with inflation picking up in 2021 allowed “uncompetitive companies to survive,” she said.
She also noted that many countries are experiencing ageing populations, creating “a workforce that does not provide the vitality needed for faster economic growth.”
The United States was an exception to sluggish productivity growth over the past year, as it is easier for companies to bring innovations to market there than in Europe and energy costs are lower, Ms. Georgieva said.
She said countries could boost their economies by cutting bureaucratic red tape and getting more women into the labor market.
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