Remarks by Managing Director Kristalina Georgieva at the 2023 Boao Forum for Asia

IMF News, March 30, 2023

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Expectation that 2023 will be another difficult year, with global growth falling under 3 percent as the effects of the war in Ukraine and monetary tightening continue to take hold.
A rapid transition from a prolonged period of low interest rates to much higher rates—necessary to fight inflation—has caused turbulence in the banking sector in some advanced economies and made policy choices harder.

Cooperation has transformed the global economy through deeper trade integration, boosting incomes and living standards.
Over the past 40 years:
- The world economy has tripled in size.
- Emerging and developing countries have quadrupled in size, making them the biggest beneficiaries.
China: 800 million people have been lifted out of poverty as it has become ever more integrated into the world economy.
Trade within Asia now accounts for almost 50 percent of the total, with China acting as a crucial hub.
Research finding: the long-term cost of trade fragmentation could be as high as 7 percent of global GDP—roughly equivalent to the combined annual output of Germany and Japan.
As a highly integrated region, Asia would be the most adversely affected by runaway fragmentation.
Policy recommendation: reinvigorate international trade in an equitable way and diversify supply chains based only on economic logic, but not beyond.

Recognition that the benefits of globalization have not been shared equally across countries or people.
Need to make supply chains more secure and diversified to address these concerns.
Recommended approach is pragmatic cooperation—working together where it matters most.

Over the past three years, low-income and vulnerable countries and people have been hit especially hard.
Domestic policy priority: fiscal policy should provide targeted support to those most in need or those most affected by food insecurity or the cost-of-living crisis.
International priority: countries in relatively stronger positions should help vulnerable members of the global community.
With interest rates high and many currencies depreciating, faster and more efficient global mechanisms for providing debt treatments to countries in debt distress are urgently needed.
Establishing such mechanisms would provide significant benefits to debtors and creditors alike by removing one important source of uncertainty to the global picture.
China’s engagement in the Common Framework and participation in the new Global Sovereign Debt Roundtable is welcomed.

Solidarity must extend to future generations; climate action matters especially in Asia given its high population density and exposure to climate shocks.
Asia is a priority region to speed up the green transition, which can offer much needed opportunities for growth and jobs.

Despite forces of fragmentation, cooperation and solidarity are presented as the twin beacons to guide policymakers through challenging times.
Collective action will make the global community stronger, wealthier, and more secure.
Closing exhortation: together, we can navigate the rough waters to reach a safe harbor.

Remarks by Managing Director Kristalina Georgieva at the 2023 Boao Forum for Asia