Global trade is recovering

Global trade is recovering

Reflecting on the status of global economy, the Managing Director for the international Monetary Fund (IMF) Kristalina Georgieva, affirmed Finance Ministers and Central Bank Governors from across the world during the G20 meeting in Brazil that world trading is recovering.

Georgieva said while trade is improving, global leaders should push towards an equal and inclusive economy free from poverty and hunger.

“I came to the G20 with a simple message: the global economy must avoid getting stuck in low gear, which would lead to a more unequal and more unstable world. I called for a renewed effort to strengthen the foundation for robust growth and job creation—sound fiscal and monetary policies; a stable and inclusive financial system; progressive taxation; and boosting support for vulnerable countries,” said Kristalina Georgieva.

COVID-19 saw a majority of economies across the globe shutting down, halting growth and shedding jobs. Most countries and industries are still recovering from the economic shock caused by the pandemic.

Georgieva says, global trading is on a recovery trajectory, she says global growth is expected to remain stable, but slow. In the IMF’s lasted projections, global growth is expected to reach 3.2 percent in 2024, and reach 3.3 percent in 2025, remaining unchanged from the IMF’s April forecast.

The Managing Director told the Ministers and Governors that world trade is recovering and is expected to grow broadly in line with GDP growth. While this is good news, she said it also means that trade is not yet the engine of growth that it used to be.

“This brings me to my main concern: at just over 3 percent, we are facing the weakest prospects for medium-term growth in decades. Interdependent challenges, high debt, fragmentation, and complexities in navigating the digital and green transitions; are holding back greater prosperity.

A low growth world is likely to be an even more unequal world. New IMF analysis suggests that periods of stagnation lasting four years or more tend to push up income inequality within countries by almost 20 percent. This is a moral and ethical concern. It is also an economic concern; an unequal world is a discontented world that may not be up to the task of adapting to the unstoppable transformations underway,” said IMF’s Kristalina Georgieva.

“Turning to inflation, there has been good progress, but the job is not yet done. Price stability is critical for sustainable and inclusive growth and thus needs to be restored. Central bankers must resist easing too early when price pressures remain persistent. They must also avoid waiting too long, and unnecessarily pouring cold water on economic activity. In this regard, preserving central bank independence is essential,” she continued.

Georgieva urged economies to gradually rebuild fiscal buffers that have been depleted from years of economic shocks, she said they must be anchored on credible medium-term plans.

“It must be done in a manner that protects vulnerable people,” she said.

Journalist

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