Interest rate message from the IMF President: We must be prepared for it to remain high for a longer time

Interest rate message from the IMF President: We must be prepared for it to remain high for a longer time

In her speech at the Asia Pacific Economic Cooperation (APEC) Summit, Georgieva stated that the global economy has been surprisingly resilient this year, but the recovery process from successive epidemics and war shocks continues to be slow and uneven.

Stating that global economic growth forecasts for both 2023 and 2024 are 3 percent, Georgieva pointed out that medium-term growth expectations are a bit weak.

Georgieva noted that global economic growth was slightly better than the predictions made at last year’s meetings, but remained below the 3.8 percent growth rate in the last 30 years.

Emphasizing that the USA is the only major economy that has fully reached its pre-Covid-19 course, Georgieva stated that, on the contrary, emerging market and developing economies remain 4 to 8 percent below their pre-pandemic growth.

“Central banks should continue to be cautious”

Pointing out that there is some good news on the inflation front, Georgieva said, “Inflation is slowing down. We expect headline inflation, which was over 9 percent last year, to drop to 4.8 percent in 2024. Core inflation is still lagging behind and as a result, unfortunately, interest rates “We need to be prepared for rates to stay high for longer, probably into 2024 and maybe into 2025.” made his assessment.

Emphasizing that central banks should continue to be cautious in places where inflation is still behind the target and convey their future intentions based on data, Georgieva stated that it will be a difficult period for financial authorities almost everywhere.

Georgieva stated that growth in the USA exceeded expectations in the third quarter, and although the momentum slowed down a little, inflation is still falling and labor markets are still very strong, and reminded that they also increased their growth forecasts for China last week.

IMF President Georgieva noted that what is good for the USA and China, the two major “engines” of the world economy, is also good for the rest of the world.

“Devastating for the countries at the center of the Israeli-Palestinian conflict”

Touching on the Israeli-Palestinian conflict, Georgieva said that it was “devastating” economically for the countries at the center of the conflict.

Georgieva pointed out that the situation is also very risky for neighboring countries Lebanon, Jordan and Egypt, and warned that the initial increase in energy prices has decreased in terms of its impact on the world economy, but if the conflict continues for a long time, the risk and negative effects on geopolitical separation will be higher.

“Climate change increases uncertainties about the future”

Pointing out that climate change also increases uncertainties about the future, Georgieva stated that there is a need for more solid macroeconomic foundations that provide little room for policy mistakes.

Georgieva stated that slow growth forecasts are mostly due to ongoing low productivity, and to change this, structural reforms are needed that will increase labor productivity, enable safe use of the opportunities of new technologies, especially artificial intelligence, and also manage their risks. He emphasized that it was.

Georgieva noted that artificial intelligence can increase labor productivity by 2 to 3 percent annually, but it will also create a transformation in the labor market and people may lose their jobs and increase social unrest if not taken into account.

Source link