IMF Chief Warns of Slower Growth and Rising Protectionism in Post-Pandemic Economy

Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), stated at the Asia-Pacific Economic Cooperation (APEC) summit in Lima, Peru, on November 15 and 16 that inflation is decreasing across the US, Europe, and Asia. She noted that this reduction has occurred without triggering a recession, unlike previous inflation spikes. She attributed the easing of inflation to effective monetary policies, improved supply chains, and stabilized food and energy prices. Georgieva forecasted that global economic growth would remain positive, with a projected 3.2% growth for this year and next, especially in the Asia-Pacific region.

However, Georgieva acknowledged that despite the easing inflation, many people in different countries continue to feel the pressure of higher prices, which remains evident in household budgets. She also pointed out that while global growth is expected, it is slower than the pre-pandemic era, where growth averaged 3.8%. The current medium-term growth rate is around 3%, which is compounded by the issue of high public debt that now stands at 100% of global GDP. Georgieva explained that high debt and elevated interest rates are making it more challenging for governments to manage budgets effectively, especially with growing demands for public spending in areas like education, infrastructure, and social services, particularly in aging societies.

She stressed that in this more fragmented world, trade is no longer the powerful engine it once was. The rise in protectionism and the growing use of industrial policies and trade barriers, fueled by national security concerns and the discontent from the losers of globalization, are evident. This year alone, over 3,000 new trade restriction measures are expected.

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