In a statement delivered at the Boao Forum for Asia, Ms. Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF) noted on March 30 that the global economy has been in choppy waters for quite some time, experiencing shock after shock after shock.
“We expect 2023 to be another difficult year, with global growth falling under 3.0 percent as the effects of the war in Ukraine and monetary tightening continue to take hold,” she noted.
According to her, a rapid transition from a prolonged period of low interest rates to much higher rates—necessary to fight inflation—has inevitably caused turbulence in the banking sector in some advanced economies and made policy choices even harder.
Over the past 40 years, the world economy has reportedly tripled in size, with emerging and developing countries quadrupling in size—making them the biggest beneficiaries.
“In China alone, 800 million people have been lifted out of poverty, as it has become ever more integrated into the world economy. A huge achievement by any standard!” said IMF managing director. “Likewise, for countries all across Asia, trade integration has been a key ingredient of strong GDP growth for many decades—including trade within the region that now accounts for almost 50 percent of the total and where China is a crucial hub.”
She further noted that it should be recognized that the benefits of globalization have not been shared equally across countries or people and supply chains need to be made more secure and diversified.
“Addressing these concerns requires a pragmatic approach—working together where it matters most, for example, to reinvigorate international trade in an equitable way and diversify supply chains based only on economic logic, but not beyond,” Ms. Georgieva noted.
The IMF research reportedly shows that the long-term cost of trade fragmentation could be as high as 7.0 percent of global GDP and as a highly integrated region, Asia would be the most adversely affected by runaway fragmentation.
Over the past three years, low-income and vulnerable countries and people have reportedly been hit especially hard.
“With interest rates high and many currencies depreciating, this is particularly important for countries in debt distress. We urgently need faster and more efficient global mechanisms for providing debt treatments to these countries,” IMF managing director said. .
Headquartered in China, the Boao Forum for Asia (BFA) is an international organization jointly initiated by 29 member states. BFA holds its annual conference in Boao, Hainan on a regular basis. The founding purpose of BFA was to promote economic integration in Asia. Its mission now is to pool positive energy for the development of Asia and the world.
