International Monetary Fund Managing Director Kristalina Georgieva and other finance and trade experts gathered at the IMF on Thursday for a debate on the global economy.
Much of the talk focused on how to counter what Georgieva has called a “synchronized slowdown” in the global economy as well as how to ease trade and geopolitical tensions.
Georgieva said that measures taken after the global financial crisis have reduced risks of shocks but advanced economies are struggling with flat productivity and yields. This has brought two consequences.
“One, guess what? If you are in the business of making money, you actually want to make money. So, we see more risk taking. We see weird things happening because the normal pathway to generate yield is not delivering in advanced economies. Delivering little bit better in emerging economies, and I’ll come to that point. But, the second conclusion I derive is that we do have to concentrate much more forcefully on why productivity has leveled,” said Georgieva.
Panelists urged a turn toward more trade, rather than protectionism. News of possible progress between the U.S. and China was welcome, but brought some skepticism.
“The negotiations reached a certain degree of consent which is good, just a few days ago here in Washington. But, you know, in Washington things change very fast. Like the weather changed very fast just in the past few days. So, I don’t know. I mean we’ll still have to be able to see whether we’ll be able to ink the negotiations into the paper in a month in APEC meeting,” said Min Zhu, Chair, National Institute of Financial Research, Tsinghua University.
And Spanish Minister of Economy and Business Nadia Calviño said countries should not engage in tit-for-tat tariffs and threats.
“Is this good at the end of the day? Well, obviously it isn’t. It’s lose-lose. So, we are very supportive of engaging in a constructive manner. Finding a better way to deal with each other. A more constructive way to deal with each other. A rules-based world trade. It doesn’t mean that we don’t need to change anything, WTO needs to be reformed. We are very willing to engage in that process. But, threats and raising tariffs doesn’t seem to be a very wise solution for me. So, patience, yes. Is that enough, I frankly doubt it,” she said.