IMF President Georgieva: Increasing Global Economic Imbalances

Striking Imbalances in the Global Economy

IMF President Kristalina Georgieva expressed her concerns about global economic imbalances during a press conference held as part of the IMF-World Bank Annual Meetings. Georgieva emphasized that although the global economy is slightly better than it was six months ago, it still contains serious problems.

Slowing Growth Expectations

Georgieva stated that the global economic growth rate is expected to slow from 3.3% last year to 3.2% this year and further to 3.1% next year. While this presents a more positive picture compared to six months ago, she stated, “The global economy is exceedingly imbalanced.”

Debt Levels and Public Spending

Georgieva noted that public debt has reached record levels and that countries need to rebuild their fiscal space. She emphasized the need to reduce imbalances, stating that countries like China that have trade surpluses should spend less on industrial policies and more on social safety nets to boost domestic demand. Similarly, she pointed out that the United States should reduce its fiscal deficits and encourage savings.

Trade Tensions and Inflation

Georgieva conveyed that using tariffs as a tool in the U.S.’s relations with its trading partners could lead to negative outcomes. She mentioned, “If trade tensions flare up, they will have adverse effects,” stressing that countries should not pursue protectionist policies. Moreover, she noted that while general inflation is on a declining trend, there are differences among countries.

Peace Process in the Middle East

Believing that the ceasefire in Gaza will have positive effects on the Middle Eastern economy, Georgieva stated that achieving lasting peace is crucial for the region. “When there is a peaceful environment, providing support becomes easier,” she said.

Artificial Intelligence and Economic Impacts

Georgieva indicated that the increase in investments in artificial intelligence could make significant contributions to the global economy, suggesting that such investments could enhance productivity in the coming period. However, she emphasized the need to be prepared, stating, “We do not have much time to get ready for artificial intelligence.”