The Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, recently highlighted the persistent challenges faced by the global economy in its recovery from the pandemic and ongoing geopolitical crises.
Georgieva noted that the IMF predicts the global economic growth to remain at 3% in 2024, similar to the current year. However, she expressed concerns about the medium-term growth prospects, stating,
"We are lagging behind the 3.8% annual growth trajectory observed over the previous three decades."
The primary driver behind the slow growth, according to Georgieva, is continued low productivity. To address this, she stressed the need for structural reforms aimed at improving productivity and effectively managing the benefits and risks associated with new technologies, particularly artificial intelligence (AI). Georgieva cited research indicating that AI has the potential to boost annual productivity growth rates by 2-3%. However, she also acknowledged the transformative impact on the labor market, cautioning that unchecked AI implementation could lead to job losses and increased social unrest.
In the context of a world undergoing technological transformation, Georgieva emphasized the importance of global collaboration in tackling key issues. These include combating climate change, ensuring financial stability in an interconnected world, and addressing debt problems, especially in low-income countries.
“We live in a more shock-prone world. Climate change increases uncertainty about the future. This means we need even stronger macroeconomic fundamentals, with very little room for policy mistakes. We need development that is inclusive, in which everyone, men and women, can contribute and everyone can benefit," Georgieva added.
She highlighted the divergence in economic recovery, pointing out that the United States is the only major economy that has fully recovered to its pre-coronavirus trajectory. In contrast, growth rates in emerging market and developing economies remain 4% to 8% below their pre-pandemic levels.
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