IMF Head: Global economy weak on low productivity

WASHINGTON, April 12 (Bernama-dpa) — Global economic activity is weak by historical standards with a slowdown in productivity the main cause, International Monetary Fund head Kristalina Georgieva said in Washington on Thursday, describing this as a “sobering reality.”

Listing the main difficulties facing the global economy, Georgieva said: “Inflation is not fully defeated. Fiscal buffers have been depleted. And debt is up, posing a major challenge to public finances in many countries.”

She put global growth at a little above 3 percent and noted concerns, including geopolitical tensions that were increasing the risks of economic fragmentation. Scars left by the coronavirus pandemic were another concern.

“As we learned over the past few years, we operate in a world in which we must expect the unexpected,” she said, reported dpa news.

On Tuesday, the IMF is to present its World Economic Outlook. In January, it predicted growth of 3.1 per cent for the year ahead.

Georgieva pointed to positive signs, saying that “global growth is marginally stronger on account of robust activity in the United States and in many emerging market economies.”

But she added that “the primary driver of weaker growth is a significant and broad-based slowdown in productivity. Our analysis shows it accounts for over half of the growth slowdown in advanced and emerging economies, and nearly all in low-income countries.”

Without a course correction, the world was heading for a sluggish and disappointing decade, she predicted.