IMF President warns: Global economy is not out of danger yet!

International Monetary Fund (IMF) President warned on Thursday that high debt and low growth remain the main obstacles to the global economy.

IMF President Georgieva said in an interview that despite significant progress in global economic recovery, governments around the world have become accustomed to borrowing, and "soft growth" has exacerbated the challenge of debt repayment.

She said, "It's not time to celebrate yet. When we look at the challenges ahead, the biggest challenge is low growth, high debt. This is where we can and must do better."

Georgieva praised the major central banks for their work in controlling inflation, but she pointed out that these effects are not universal, as some economies are still struggling with high inflation, which has exacerbated social and political discontent.

She said, "The real success has been in major advanced economies... while in some parts of the world, inflation is still a problem. The impact of high prices still exists, making people in many countries feel a decline in living standards and feel angry."

These remarks come as finance ministers and central bank governors from around the world are set to gather in Washington, D.C. next week for the 2024 IMF and World Bank Annual Meetings. They will discuss topics such as the global economic outlook, poverty eradication, and green energy transition.

Georgieva warned that international trade will no longer be the "engine of growth" it once was, emphasizing the surge in restrictive policies among many economies.

She said, "We have seen some 'closed policies' in the United States and elsewhere, where they believe globalization has not benefited them; their jobs have disappeared, their communities have not been attended to, and for security reasons—mainly stemming from the pandemic and the Russia-Ukraine conflict. All of this has put national security priorities on the agenda. All of this is indeed creating a more distrustful environment, with developed economies now leading the way in implementing industrial measures and protectionist measures, rather than emerging markets."

The IMF President had previously warned against implementing such restrictive measures, stating in June that some politicians' increasing "fondness" for tariffs and other restrictive measures was harming international development.

On Thursday, she reiterated this message, insisting that "retaliatory" trade measures could inflict the same level of harm on both the implementers and the target countries.

She said, "Our advice is to carefully weigh the costs and benefits, and what this may mean in the medium term. Of course, we also do our part, calculating the costs and benefits, and showing who bears these costs, as tariffs are usually borne by the businesses and consumers of the country implementing the tariffs."

Georgieva also pointed out earlier on Thursday that broader geopolitical tensions are one of the main risks to global financial stability.

In her opening remarks, she said, "We are all very concerned about the escalation of conflicts in the Middle East and the instability it may cause to the regional economy and the global oil and natural gas markets."