Global economic slowdown/ IMF warning/ China economic reforms/ global debt/ Kristalina Georgieva/ IMF World Bank meetings/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ IMF Managing Director Kristalina Georgieva warned that the global economy is at risk of stagnating in slow growth and high debt. She called for China to implement reforms to boost consumer spending and address its struggling property market. The IMF projects global growth at a modest 3.2% in 2024.
Global Economic Outlook Quick Looks:
- Global growth concerns: IMF warns of potential stagnation in a “low growth, high debt” cycle, with global growth forecast at 3.2%.
- Rising global debt: Government debts worldwide are projected to reach $100 trillion in 2024, or 93% of global economic output.
- China’s economy: The IMF urged China to shift from export reliance to consumer spending for sustainable growth.
- Inflation progress: Inflation is easing in wealthy countries, with central banks expected to meet their 2% target in 2025.
- Property market reforms: China needs to address its collapsing property market to boost consumer confidence and spending.
IMF Calls for Reforms as Global Growth Slows and Debt Rises
Deep Look:
IMF Chief Warns Global Economy Faces Slow-Growth Risk, Urges China to Implement Key Reforms
The head of the International Monetary Fund (IMF), Kristalina Georgieva, sounded an alarm on Thursday, warning that the global economy is in danger of falling into a prolonged period of sluggish growth and rising debt levels. Speaking at the IMF and World Bank’s annual meetings in Washington, Georgieva emphasized the growing risks of geopolitical tensions and lingering economic challenges, urging immediate action to prevent long-term stagnation.
Global Growth Stagnation and Debt Concerns
Georgieva pointed to mounting economic headwinds, including slow trade and high government debts, as key factors putting pressure on the global economy. The IMF projects that global economic growth will reach just 3.2% this year, a rate Georgieva described as “anemic.”
“We are facing anxious times,” Georgieva told reporters. “The global economy is at risk of getting stuck on a low growth, high debt path.” She warned that this scenario could lead to lower incomes and fewer job opportunities across the world.
The COVID-19 pandemic, followed by widespread geopolitical tensions—particularly between the United States and China—has weakened international trade, which has historically been a strong engine of growth. “Trade is no longer a powerful engine of growth,” she noted, highlighting the increasingly fragmented global economy.
Soaring Global Debt
Another critical issue is the significant debt burden carried by many countries, exacerbated by the financial measures taken to combat the effects of the pandemic. The IMF estimates that global government debt will exceed $100 trillion by the end of 2024, accounting for 93% of the world’s total economic output. By 2030, that figure is expected to approach 100%, raising concerns about long-term economic stability.
Despite these troubling trends, Georgieva pointed out that the global economy has made notable progress in controlling inflation. Higher interest rates set by the U.S. Federal Reserve and other central banks, combined with improvements in supply chains, have helped to reduce price pressures. The IMF expects inflation in wealthy countries to drop to the 2% target set by central banks by next year, a sign of economic recovery without triggering a recession. “For most of the world, a soft landing is in sight,” Georgieva said.
China’s Slowing Economy and Urgent Call for Reforms
A significant part of the global economic equation lies in China, the world’s second-largest economy. The IMF has downgraded China’s growth forecast to 4.8% for 2024, down from 5.2% the previous year. The fund predicts that Chinese growth will slow further to 4.5% in 2025 unless Beijing implements key reforms.
Georgieva stressed the need for China to reduce its dependence on exports and shift toward a more consumer-driven economy. “A more reliable engine of growth would be consumer spending,” she said, urging Chinese leaders to focus on increasing domestic consumption rather than relying on global trade, which has been increasingly strained by geopolitical tensions and supply chain disruptions.
A major factor dragging down China’s economy is its property market crisis. The collapse of major property developers has not only shaken investor confidence but also dampened consumer sentiment. Georgieva emphasized that decisive government action is needed to stabilize the property sector and restore public confidence. Without these reforms, she warned, China’s economic growth could dip to below 4%, a sharp decline from its once high-flying status.
Inflation Eases but Uncertainty Remains
Although the fight against inflation appears to be yielding positive results, Georgieva acknowledged that many households around the world are still struggling with high prices. She also noted that, while governments report relatively stable economic conditions, ordinary people are not feeling optimistic about their personal financial futures. The IMF has called on world leaders to implement policies that not only promote economic growth but also ensure that the benefits reach the broader population.
Conclusion: A Call for Global Cooperation and Reform
The IMF’s latest warnings underscore the precarious state of the global economy as it faces the combined challenges of slowing growth, high debt, and geopolitical fragmentation. While the IMF sees progress in controlling inflation, much work remains to be done, particularly in countries like China, where reforms are urgently needed to sustain long-term growth.
As Georgieva made clear, decisive action is needed to prevent the world from falling into a prolonged period of low growth and economic uncertainty. The IMF’s 190 member nations must act swiftly to promote economic stability, financial cooperation, and policies that foster inclusive growth across the globe.
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