The war in Ukraine comes at a time when the world is confronted with challenges including the pandemic and rising inflationary pressures. Multilateral efforts are more important than ever to address these challenges and foster a stronger, greener, and more inclusive global recovery.
- Multiple headwinds. Panelists stressed that the world is grappling with multiple shocks including the war in Ukraine, high inflation, food and energy insecurity, high debt levels, and climate change. Georgieva noted that the IMF’s further possible downward revision of the global growth forecast depends on the war’s duration and the effectiveness of policies to deal with inflation without slowing down economic growth. Lagarde noted that the war has not only led to devastation and a refugee crisis in Europe but has also caused ripple effects globally. With U.S. inflation beyond the Federal Reserve’s 2-percent target, Powell emphasized the need to establish price stability and noted that it is appropriate to move a little more quickly to remove monetary accommodation. Indrawati noted that the U.S. monetary policy tightening and COVID lockdowns in a few Chinese cities will exert a huge impact on many emerging markets and developing countries, adding pressure on their nascent recovery from the pandemic. Noting that its debt vulnerabilities have risen since the onset of the pandemic, Mottley highlighted that Barbados does not have the same fiscal and monetary policy accommodation cushion as the advanced economies.
- Globalization. Powell noted that it is unclear if the world is witnessing a reversal of globalization, but the pace of globalization is certainly slowing down. Georgieva argued that it is too early to “buy a coffin” for globalization. The world has achieved so much because of the integrated global economy, and it is irresponsible to make the world poorer.
- International coordination. Panelists concurred that international cooperation at this juncture is more critical than ever. One of the objectives of the IMF and World Bank Spring Meetings, highlighted Georgieva, is to provide a platform for policymakers to deliberate and identify the optimal policy mix to address short-term challenges without jeopardizing long-term sustainable growth. The newly-established Resilience and Sustainability Trust will provide long-term concessional financing for many low- and middle-income countries. Mottley called for non-Paris Club creditors and the private sector to further contribute to resolving countries’ debt vulnerabilities. Indrawati stressed that preserving global cooperation is one of the most important global assets.
“We do live in a more shock-prone world. If anything, we have learned in these two years, that we have to be more agile and resilient to these shocks.” Kristalina Georgieva
“All wars are horrible, and this one is no different.” Christine Lagarde
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