General

IMF Chief Concerned World Is ‘Sleepwalking’ into Fragmentation

The head of the International Monetary Fund (IMF) expects the outlook for the world economy to get even gloomier next year with increased poverty and less security.

“We have been hit by shock upon shock upon shock — a global pandemic, a war in Europe, and a cost-of-living crisis,” IMF managing director Kristalina Georgieva told regional leaders meeting in Phnom Penh.

“And they have led to a rather gloomy picture for the world economy — for this year and especially for next year.”

Georgieva said supply-chain interruptions and the rapid increase of energy and food prices this year had created “stubbornly high inflation”, leading to tighter financial conditions and a slowdown in global growth from 6 percent in 2021 to 3.2 percent in 2022.

“We project 2.7 percent for 2023, but with a 25 percent probability that growth may actually fall below 2 percent,” she said.

“While we look at this gloomy picture, even more troubling is the trend towards increased fragmentation — at a time when we need each other the most.

“And I am very concerned that we may be sleepwalking into a world that would be poorer and less secure as a result.”

ASEAN COULD BE ‘KEY PLAYER’ TO HELP PREVENT FRAGMENTATION

The IMF chief said Southeast Asia was a “relative bright spot on a dark horizon” with ASEAN’s growth projected at 5 percent this year and 4.7 percent next year, “well above the global average” with progress in reforms and the integration of regional economies.

“That is why I very much look to ASEAN to be a key player in helping to prevent fragmentation, and in actually encouraging the world to stay on the right path.”

But “there is no room for complacency. We also have to recognise that these countries have been hit by the scarring from the pandemic, and now by the slowing down of the global economy.

“It is very important, therefore, that ASEAN should focus its policies within that global context and recognise this scarring.”

‘POTENTIALLY HUGE’ OPPORTUNITIES FOR ASEAN

Georgieva identified “potentially huge opportunities” for ASEAN amid the current global economic turmoil.

“Supply chain changes are creating new opportunities,” she said.

“Opportunities from the new green climate-resilient economy are here to be captured. Digitalisation offers another opportunity and has already led this region to higher performance, although digitalisation also carries its own risks.”

“So all in all, bravo to ASEAN. We need a bright star in this grey sky of ours. To keep it shining, we need a world that is integrated, one where we are all working together for the betterment of future generations.”
‘REMARKABLE ACHIEVEMENTS’ IN CAMBODIA

The IMF chief meanwhile praised Prime Minister Samdech Akka Moha Sena Padei Techo Hun Sen and the Cambodian people for “remarkable achievements” over the past two decades.

“You took the country from the darkest moment in its history to now being one of the fastest-growing economies in the world, dramatically reducing poverty, improving standards of living and aspiring to be an upper-middle income country by the end of this decade,” she said.

Source: Agency Kampuchea Press