On December 6, the Global Economic Governance 50 Forum (GEG 50) hosted a private seminar featuring Li Bo, the Deputy Managing Director of the International Monetary Fund (IMF), and his team. The seminar was focused on the 'World Financial and Economic Outlook 2024', and offered an analysis and forecast of the current and future state of global economy and finance. The seminar was chaired by Min Zhu, the Former Deputy Governor of the People’s Bank of China and Founder of GEG50, and was attended by nearly 100 experts and scholars in the field.
Li Bo initiated the seminar with an overview of the World Economic Outlook Report published in October, providing several forecasts concerning global economic trends. Firstly, he suggested that real interest rates are likely to remain elevated in the near term. Secondly, he predicted that in 2023, developed economies would further ease their fiscal policies, leading to a deficit across all developed economies for that year. Thirdly, he indicated a declining global growth rate for both 2023 and 2024, with an expected sustained weakness until the end of the forecast period, resulting in a cumulative loss in global GDP of 5 percent compared to pre-pandemic projections. Concluding his introduction, Li Bo offered a set of policy recommendations, focusing on aspects of monetary and fiscal policy.
Photo of Li Bo (left) and Min Zhu (right)
Vitor Gaspar, the Director of the Fiscal Affairs Department at IMF, highlighted the significant impact of the two largest global economies, China and the United States, on changes in worldwide debt levels. He emphasized the necessity for countries to enhance their fiscal frameworks and institutions to secure stability over medium and long-term periods. Particularly for China, Gaspar pointed out the crucial need for its economic growth model transformation to be precisely supported and guided by its fiscal policy.
Fabio Massimo Natalucci, the Deputy Director of the Monetary and Capital Markets Department at IMF, provided an in-depth analysis of the current state of global financial stability. He observed that the market is generally optimistic about inflation, anticipating that developed countries are likely to gradually return to their target inflation ranges. Based on the trends in the U.S. market, Natalucci suggested that yields on long-term Treasury bonds might continue to decrease in the future, which could positively influence the U.S. stock market. However, Natalucci warned about certain risks associated with tighter monetary policies and rising interest rates. These risks include potential bank bankruptcies, adverse effects on the stock markets, and challenges to the solvency of businesses.
Krishna Srinivasan, the Director of the Asia and Pacific Department at IMF, pointed out the significant contribution of China and India to global economic growth in light of their respective economic developments. He noted that China's rapid recovery following adjustments in pandemic policies and India's resilient economic growth are projected to account for 50% of global growth in 2023, and the Asia region as a whole is expected to contribute two-thirds of this growth. Srinivasan also mentioned that as core inflation is trending downward across the Asia region, the pressure on exchange rates, previously affected by the interest rate hikes in the U.S. dollar, is gradually easing. However, he raised concerns about the future, particularly regarding the risk of economic fragmentation in the Asia-Pacific region. He warned that any form of economic decoupling or shifts in production value chains could lead to a slowdown in global GDP growth.
Abebe Aemro Selassie, the Director of the African Department at IMF, highlighted the diverse economic recovery patterns among African countries following the pandemic. He noted that many countries in the Sub-Saharan region are grappling with challenges such as high debt levels and funding shortages. Despite these challenges, Selassie pointed out that the young and growing population in Africa could provide a significant boost to the continent's economic growth.
Top left: Vitor Gaspar;
Top right: Fabio Massimo Natalucci;
Bottom left: Krishna Srinivasan;
Bottom right: Abebe Emilon Selassie
The members of GEG50 engaged in extensive interactions and discussions with experts and scholars from IMF.
The picture shows the scene of the closed-door seminar
The seminar is hosted by GEG50 and organized by Tsinghua PBCSF.
The Global Economic Governance 50 Forum is committed to conducting independent, forward-looking and academically supported policy research on the improvement and reform of the global economic governance system, and providing solutions on how China better engages in global economic governance.
