International Cooperation is Key to Boost Global Economy, Says IMF Senior Re...

TMTPOST -- International cooperation is the key to global economic recovery and growth, said Steven Barnett, IMF Senior Resident Representative in China on Friday at the 2024 T-EDGE Conference and TMTPost Annual Economic Meeting.

The 2024 T-EDGE Conference, themed "All-in On Globalization, All-in On AI," convened global leaders, industry experts, and stakeholders to discuss the transformative potential of artificial intelligence (AI) in addressing pressing global challenges.

While the outlook remains stable, it is underwhelming, said Barnett. The global growth forecast stands at approximately 3.2% for both this year and the next, continuing the pattern observed in 2023. However, this is below the pre-pandemic average growth rate of 3.7% over the previous two decades, which highlights the challenges the global economy faces in regaining momentum, he added.

Barnett referenced IMF head Kristalina Georgieva's earlier statement, stressing that “we can do better” when it comes to global economic performance. While current growth may be stable, it is not enough to overcome the losses incurred during the pandemic and its aftermath. Specifically, the world has experienced a 3% GDP loss since the pandemic, with lower-income countries suffering the most, facing losses of up to 8%.

Rising geopolitical tensions and the threat of trade fragmentation pose risks to future growth. Strengthening global trade partnerships and ensuring international cooperation are vital for reigniting global growth.

In addition, intensified efforts must be made to support low-income and vulnerable economies. The IMF has already ramped up its efforts to assist these nations, including a fivefold increase in lending to low-income countries and nearly $1 billion in debt relief. Furthermore, the IMF has created a new facility to help countries address long-term challenges such as climate change and pandemics.

“For the first time ever, we have a longer-term lending facility that helps countries deal with challenges like climate change and future pandemics. We call the funding for this the Resilience and Sustainability Trust. We've already had 20 countries tap into this facility,” he shared.

The fight against inflation remains a priority, with central banks around the world making progress in bringing inflation under control. However, there is a pressing need to rebuild fiscal buffers, especially in low-income countries, where debt servicing costs have surged dramatically. Another important focus is boosting productivity growth globally, which is essential for sustaining long-term economic expansion.

“The key to long-run growth is productivity. This really comes from two ways. One is innovation, a theme well understood here. And the other is through the better allocation of resources, moving resources to their highest productivity uses,” he pointed out.

For China, the economy is forecasted to grow by 4.8% in 2024, in line with the country's growth target of around 5%. As a major global economic player, China's performance is expected to contribute significantly to global growth, with projections indicating it will add 0.9 percentage points to global growth, Barnett concluded.