The head of the International Monetary Fund (IMF) has issued a warning about the persistent challenges of high debt and sluggish economic growth, which continue to hinder the global economy.
IMF Managing Director, Kristalina Georgieva acknowledged that, while the global economic recovery had made notable strides, many governments had grown too reliant on borrowing, with “anemic growth” making it harder to manage their debt burdens.
“It’s not yet time to celebrate,” Georgieva told Karen Tso in an interview. “Looking ahead, our biggest challenge is low growth combined with high debt. This is where we must improve.”
Georgieva praised major central banks for their efforts in curbing inflation but pointed out that success has been uneven. Some economies still grapple with high prices, leading to rising social and political tensions.
“It is successful major economies that have done well and there are pockets in the world where inflation is still a problem,” she said.
“The impact of higher prices remains, and it is making many people in many countries feel worse off and angry.”
The comments come as finance ministers and central bank governors are set to meet next week in Washington DC for the 2024 annual meetings of the IMF and the World Bank Group.
They will discuss the world economic outlook, poverty eradication and the green energy transition.
Georgieva warned that international trade would no longer be the “engine of growth” it once was, highlighting the proliferation of restrictive policies among many economies.
The U.S. and the European Union have moved to impose a series of punitive tariffs against China over what they deem as Beijing’s unfair trade practices.
“What we are seeing in the United States, but also elsewhere, is pressures from people who understandably feel that globalization did not work for them; their jobs disappeared, their communities had not been attended, and concerns on security grounds — mostly grounded in the impact of the pandemic, and the impact of Russia’s aggression against Ukraine — they bring national security priorities up on the list,” she said.
“All of this indeed is creating more of an environment of mistrust and now it is advanced economies more than emerging markets that are leading in industrialist measures [and] in protectionist measures.”