Twice a year finance ministers and central bank chiefs get together to hear and exchange notes with the International Monetary Fund and the World Bank on economic challenges and ways to make the world a better place to live. And as has been happening in the last few years the IMF was measured in its assessment—that global economic recovery remained in track, growth bottoming out this year before rising slightly next year. Growth this year would be 2.8 per cent and only rising modestly to 3 per cent in 2024. “More than ever, policy makers need a steady hand and clear communication”, remarked the IMF’s chief economist Pierre-Oliver Gourinchas, underlying the absolute imperative of strengthening oversight.
The World Economic Outlook of the IMF has highlighted several factors for the current and future state of the global economy. “Although inflation has declined as central banks have raised interest rates and food and energy prices have come down, underlying price pressures are proving sticky, with labor markets tight in a number of economies. Side effects from the fast rise in policy rates are becoming apparent, as banking sector vulnerabilities have come into focus and fears of contagion have risen across the broader financial sector, including nonbank financial institutions”, the Fund maintained making the point that debt levels remain high and hence limiting the ability to respond to new challenges.
Even without the IMF mentioning it, the international system was quite aware of the downsides of the continuing Russian war in the Ukraine are geo-political tensions are quite high contributing its share to the uncertainties of global economic growth. Add to this the persistence of the Covid 19 then we have a picture of developing and the under developing economies continuing to be impacted in a negative way. In fact a relatively strongly performing economy like India is pegged to grow at 5.9 per cent in 2023-24 or down by 0.2 per cent estimate from earlier this year, but much lower that the Reserve Bank of India’s prediction of 6.5 per cent. The IMF has rather warned in direct terms that the turmoil in the financial system will hurt growth. “With the increase in financial market volatility, the fog around the world economic outlook has thickened”, the Fund has maintained.
Yet in all the talk of the future of global economic growth and in what international institutions like the IMF and the World Bank can do to streamline the process, there is also the urgent need for global leaders to take note of a new group of people that are increasingly clamoring for attention—the 100 million or so who have been displaced for political, economic and conflict reasons either within their own countries or forced out throughout the world and in many cases denying generations of basic rights such as education. Merely paying lip service to the plight of these unfortunates who are forced to suffer for no fault of theirs would make a mockery of all those high sounding talk of developmental goals and aspirations.