International Monetary Fund (IMF) chief Kristalina Georgieva warned of “geoeconomic fragmentation” and said the global economy was facing “the biggest test since World War II”.
Ahead of this year’s World Economic Forum (WEF), Georgieva said in a blog post that the global economy was facing its “biggest test since World War II”, with Russia’s invasion of Ukraine exacerbating the coronavirus outbreak, crippling one crisis after another. life, dragging down economic growth and pushing up inflation.
Rising food and energy prices are weighing heavily on households around the world, while central banks are tightening monetary policy to curb inflation, putting further pressure on heavily indebted countries, businesses and households, as well as financial markets. The world faces a “potential confluence of catastrophes” amid rising volatility and the ongoing threat of climate change.
Georgieva also pointed out that the Russian-Ukrainian war has sharply increased the risk of geoeconomic division and hindered the ability to respond, adding that “the tensions over trade, technical standards and security have been escalating for many years, undermining the growth and trust of the current global economic system.”
Georgieva warned that further economic disintegration would have huge global costs, hurting people at all levels of society and the economy, and that technological fragmentation alone could cost many countries a loss of 20 percent of gross domestic product (GDP). 5%.
However, the article mentioned relevant countermeasures from four aspects, including strengthening trade to increase resilience, jointly tackling debt, modernizing cross-border payments, and addressing climate change.
First, in order to solve the problem of growing economic fragmentation, we call on governments to reduce trade tariff barriers, alleviate shortages and reduce the price of food and other commodities, while diversifying exports to improve economic resilience, emphasizing that not only countries, but also companies need to diversify imports Securing your supply chain and maintaining the enormous benefits of global integration to your business.
Second, the IMF urges all parties to cooperate in facing the debt problem, which needs to be restructured as about 60% of low-income countries have severe debt vulnerabilities. Without decisive cooperation to ease the burden on these countries, their position with their creditors will worsen, but a return to debt sustainability will attract new investment and spur inclusive growth.
Third, the IMF calls for the modernization of cross-border payments, as inefficient payment systems are another barrier to inclusive growth. The IMF estimates that the average cost of an international remittance payment is 6.3 percent, meaning that about $45 billion is diverted each year to intermediaries, away from millions of low-income households.
Therefore, countries can work together to develop a global public digital platform – a new payment infrastructure with clear rules so that everyone can send money with the lowest cost, highest speed and highest security.It can also link various forms of money, including central banksdigital currency。
Finally, the IMF calls for closing the “intentions and policies gap” on climate change as soon as possible, advocating for a comprehensive green transition approach that combines “carbon pricing” with investment in renewable energy and compensation for those affected by climate change People who are adversely affected by change.