{
  "title": "Annual Meetings 2019 \"Curtain Raiser\" Speech",
  "publication": "IMF News, October 8, 2019",
  "sourceUrl": "https://www.imf.org/en/news/articles/2019/10/03/sp100819-ams2019-curtain-raiser",
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  "summary": "On October 8, Managing Director Kristalina Georgieva delivered a speech to set the stage for the October 2019 Annual Meetings.",
  "authors": [
    "Kristalina Georgieva"
  ],
  "publishDate": "2019-10-08",
  "sections": [
    {
      "heading": "Introduction & Purpose",
      "content": "- Delivered by Kristalina Georgieva, IMF Managing Director, as her first speech in that role to set the stage for the October 2019 Annual Meetings.\n- Central question posed: \"What can we all do to help fix the fractures in the global economy and encourage stronger growth?\"\n- Emphasis on coordinated, multilateral responses and the IMF's role alongside its Executive Board and staff."
    },
    {
      "heading": "Global Outlook: synchronized slowdown",
      "content": "- Two years earlier nearly 75 percent of the world was accelerating (measured by GDP).\n- In 2019, growth is decelerating in nearly 90 percent of the world.[1]\n- The global economy is described as being in a synchronized slowdown; growth in 2019 will fall to its lowest rate since the beginning of the decade.\n- World Economic Outlook to show downward revisions for 2019 and 2020.\n- Despite deceleration:\n  - Close to 40 emerging market and developing economies are forecast to have real GDP growth rates above 5 percent — including 19 in sub-Saharan Africa.\n  - Unemployment in the United States and Germany is at historic lows.\n  - Advanced economies (U.S., Japan, euro area) show softening activity.\n  - Slower growth is pronounced in some large emerging markets such as India and Brazil.\n  - China’s growth is gradually coming down from its earlier rapid pace.\n- The precarious outlook affects countries already facing difficulties, including some IMF program countries."
    },
    {
      "heading": "Fractures underlying the slowdown",
      "content": "- Central theme: \"Fractures\" — trade disputes, Brexit, geopolitical tensions, currency pressures, and heightened uncertainty.\n- Trade:\n  - Global trade growth has come to a near standstill.\n  - Manufacturing activity and investment have weakened substantially; risk that services and consumption will be affected.\n  - Trade disputes now extend between multiple countries and into other critical issues.\n  - Potential long-lasting changes: broken supply chains, siloed trade sectors, a “digital Berlin Wall” forcing technology system choices.\n- Projected costs of US–China trade conflicts:\n  - Cumulative effect could mean a loss of around $700 billion by 2020, or about 0.8 percent of GDP (approximately the size of Switzerland’s entire economy).\n- Uncertainty is holding back economic potential; responses must be coordinated."
    },
    {
      "heading": "Policy priorities to secure stronger and more resilient growth",
      "content": "- Overarching message: domestic reforms plus synchronized international cooperation.\n\n- 1. Use Monetary Policy Wisely & Enhance Financial Stability\n  - Central bank independence is foundational; banks should communicate clearly, remain data dependent, and where appropriate keep interest rates low given subdued inflation and weakening growth.\n  - Recognition that interest rates are already very low or negative in many advanced economies; conventional space may be limited.\n  - Prolonged low rates create negative side effects (pension funds, life insurers taking more risk).\n  - New analysis: if a major downturn occurs, corporate debt at risk of default would rise to $19 trillion, or nearly 40 percent of the total debt in eight major economies.[2]\n  - Low rates prompt investors to search for higher yields in emerging markets, increasing exposure to sudden capital flow reversals.\n  - Recommendation: deploy macroprudential tools, new approaches to manage debt and volatility.\n  - Monetary and financial policies alone are insufficient; fiscal policy must play a central role.\n\n- 2. Deploy Fiscal Tools to Meet Current Challenges\n  - Countries with fiscal space should deploy or prepare to deploy fiscal firepower; low interest rates may give some policymakers additional money to spend.\n  - Examples where increased spending could help: Germany, the Netherlands, and South Korea — especially infrastructure and R&D.\n  - Caveat: global public debt is near record levels; countries with high debt-to-GDP ratios should continue fiscal restraint.\n  - Universal principle: reducing debts and deficits should protect education, health, and jobs.\n  - Domestic revenue mobilization: reducing corruption and utilizing digital tools in tax collection can unlock resources and help reach the 2030 Sustainable Development Goals.\n\n- 3. Implement Structural Reforms for Future Growth\n  - Structural reforms are essential to address automation, shifting demographics, and medium- to long-term productivity.\n  - New IMF research (emerging markets and developing economies) shows structural reforms can raise productivity and generate enormous economic gains.\n  - The right reforms in the right sequence could double the speed at which emerging markets and developing economies reach the living standards of advanced economies.[3]\n  - Concurrent reforms across countries produce positive spillovers.\n  - Country examples:\n    - Chile: childcare programs lifted female labor force participation and helped the economy.\n    - Ghana: anti-corruption legislation created more transparency and accountability.\n    - Jamaica: cutting red tape eased starting new businesses while completing an IMF-supported program.\n  - Urgent call: act now — \"The time to jump is before your feet get wet.\"\n\n- 4. Embrace International Cooperation\n  - Need for cooperation is rising while the will to engage is declining.\n  - Priorities for cooperation include: safely adapting to fintech, fully implementing the financial regulatory reform agenda, fighting money laundering and financing of terrorism, and addressing climate change.\n  - Cooperation should deliver tangible results in people’s lives and demonstrate the power of partnership in crises."
    },
    {
      "heading": "Climate change: mitigation and adaptation priorities",
      "content": "- Climate change is a crisis where all have responsibility.\n- IMF priority: assist countries to reduce carbon emissions and become more climate resilient.\n- Current average carbon price is $2 per ton; at that level most people and companies have little financial incentive to transition.\n- Limiting global warming to a safe level requires a significantly higher carbon price.\n- Example: Sweden introduced a carbon tax in 1991; low- and middle-income households received higher transfers and tax cuts to offset higher energy costs.\n  - Sweden’s policy coincided with a 25 percent reduction in carbon emissions since 1995 and the economy growing by over 75 percent.\n- New Fiscal Monitor research confirms carbon taxes can be powerful and efficient tools, but tax systems must be changed, not simply layered with new taxes.[5]\n- Additional revenues could be used to cut other taxes, assist affected households, and support clean energy infrastructure.\n- Adaptation focuses on pricing risk and incentivizing investment in new technologies.\n- Private sector progress: green bonds rising in Europe and parts of Asia (Global Financial Stability Report).[6]\n- Strong call for immediate, cooperative action to avoid the high price of inaction."
    },
    {
      "heading": "Scenario for coordinated action if slowdown worsens",
      "content": "- If the global economy slows more sharply, a coordinated fiscal response may be needed.\n- Current status: \"We are not there\" yet, but preparedness for coordinated action is advised.\n- Research shows that changes in spending are more effective and have a multiplier effect when countries act together.\n- Historical precedent: 2009 G20 joint stimulus as an example of effective coordinated policy.\n- Final appeal: IMF’s 189-member countries should come to the Annual Meetings prepared to find solutions and cooperate.\n\nAnnual Meetings 2019 \"Curtain Raiser\" Speech — Kristalina Georgieva, October 8, 2019.\n\n---\n\n Content in this bundle\n\n- Staff Paper\n  - Staff Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Staff Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva\n- People's Republic of China and the IMF\n- Germany and the IMF\n- United States and the IMF\n- Speeches\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2019/10/03/sp100819-ams2019-curtain-raiser"
    }
  ],
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    "Authors: Kristalina Georgieva",
    "Published: October 8, 2019",
    "Delivered by Kristalina Georgieva, IMF Managing Director, as her first speech in that role to set the stage for the October 2019 Annual Meetings.",
    "Central question posed: \"What can we all do to help fix the fractures in the global economy and encourage stronger growth?\"",
    "Emphasis on coordinated, multilateral responses and the IMF's role alongside its Executive Board and staff.",
    "Two years earlier nearly 75 percent of the world was accelerating (measured by GDP).",
    "In 2019, growth is decelerating in nearly 90 percent of the world.[1]",
    "The global economy is described as being in a synchronized slowdown; growth in 2019 will fall to its lowest rate since the beginning of the decade.",
    "World Economic Outlook to show downward revisions for 2019 and 2020.",
    "Despite deceleration:",
    "The precarious outlook affects countries already facing difficulties, including some IMF program countries.",
    "Central theme: \"Fractures\" — trade disputes, Brexit, geopolitical tensions, currency pressures, and heightened uncertainty.",
    "Trade:",
    "Projected costs of US–China trade conflicts:",
    "Uncertainty is holding back economic potential; responses must be coordinated.",
    "Overarching message: domestic reforms plus synchronized international cooperation.",
    "1. Use Monetary Policy Wisely & Enhance Financial Stability",
    "2. Deploy Fiscal Tools to Meet Current Challenges",
    "3. Implement Structural Reforms for Future Growth",
    "4. Embrace International Cooperation",
    "Climate change is a crisis where all have responsibility.",
    "IMF priority: assist countries to reduce carbon emissions and become more climate resilient.",
    "Current average carbon price is $2 per ton; at that level most people and companies have little financial incentive to transition.",
    "Limiting global warming to a safe level requires a significantly higher carbon price.",
    "Example: Sweden introduced a carbon tax in 1991; low- and middle-income households received higher transfers and tax cuts to offset higher energy costs.",
    "New Fiscal Monitor research confirms carbon taxes can be powerful and efficient tools, but tax systems must be changed, not simply layered with new taxes.[5]",
    "Additional revenues could be used to cut other taxes, assist affected households, and support clean energy infrastructure.",
    "Adaptation focuses on pricing risk and incentivizing investment in new technologies.",
    "Private sector progress: green bonds rising in Europe and parts of Asia (Global Financial Stability Report).[6]",
    "Strong call for immediate, cooperative action to avoid the high price of inaction.",
    "If the global economy slows more sharply, a coordinated fiscal response may be needed.",
    "Current status: \"We are not there\" yet, but preparedness for coordinated action is advised.",
    "Research shows that changes in spending are more effective and have a multiplier effect when countries act together.",
    "Historical precedent: 2009 G20 joint stimulus as an example of effective coordinated policy.",
    "Final appeal: IMF’s 189-member countries should come to the Annual Meetings prepared to find solutions and cooperate.",
    "**Staff Paper**",
    "[https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva](https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva)",
    "[People's Republic of China and the IMF](http://www.imf.org/external/country/CHN/index.htm)",
    "[Germany and the IMF](http://www.imf.org/external/country/DEU/index.htm)",
    "[United States and the IMF](http://www.imf.org/external/country/USA/index.htm)",
    "[Speeches](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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