March 30, 2023
PRESS OFFICER:
Phone: +1 202 623-7100Email: MEDIA@IMF.org
Distinguished guests, ladies, and gentlemen—good morning, zao shang hao!
It is very fitting for us to be here today. The Boao Forum for Asia is hosted by the home of Mulantou Lighthouse, the tallest in China, a beacon of light guiding ships to safe harbor — an inspiration for our discussions so they can guide global policymakers navigating very challenging times.
The global economy has been in choppy waters for quite some time, experiencing shock after shock after shock. We expect 2023 to 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 inevitably caused turbulence in the banking sector in some advanced economies and made policy choices even harder.
So, how can policymakers navigate this time of uncertainty?
This year’s Boao Forum offers an answer: through cooperation and solidarity, the twin beacons of light we can rely on to guide us through the challenges that lay ahead.
Cooperation has already transformed the global economy by deepening trade integration—which has boosted incomes and living standards across the world.
Over the past 40 years, the world economy has tripled in size, with emerging and developing countries quadrupling in size—making them the biggest beneficiaries. In China alone, 800 million people have been lifted out of poverty, as it has become ever more integrated into the world economy. A huge achievement by any standard!
Likewise, for countries all across Asia, trade integration has been a key ingredient of strong GDP growth for many decades—including trade within the region that now accounts for almost 50 percent of the total and where China is a crucial hub.
But we also must recognize that the benefits of globalization have not been shared equally across countries or people. And we have learned that supply chains need to be made more secure and diversified.
Addressing these concerns requires a pragmatic approach—working together where it matters most, for example, toreinvigorate international trade in an equitable way and diversify supply chains based only on economic logic, but not beyond.
Our research shows that 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. And as a highly integrated region, Asia would be the most adversely affected by runaway fragmentation.
Cooperation goes hand in hand with solidarity with those in greatest need. Over the past three years, low-income and vulnerable countries and people have been hit especially hard.
It starts at home, with governments protecting vulnerable people in their own countries. This means fiscal policy providing targeted support to those most in need or those most affected by food insecurity or the cost-of-living crisis.
And it also means countries in a relatively stronger position helping the vulnerable members of our global community . With interest rates high and many currencies depreciating, this is particularly important for countries in debt distress. We urgently need faster and more efficient global mechanisms for providing debt treatments to these countries.
After all, establishing such mechanisms would provide significant benefits to debtors and creditors alike. Success would remove one important source of uncertainty to the global picture. In this regard, China’s engagement in the Common Framework and participation in the new Global Sovereign Debt Roundtable is very much welcome.
Solidarity must also extends to the future generations — and nowhere it matters more that in climate action, especially in Asia with its high population density and exposure to climate shocks. This is also the place to speed up the green transition offering much needed opportunities for growth and jobs.
Allow me to conclude by stating the obvious: despite all the forces of fragmentation, we know we are stronger together.
Together, we spread a guiding light far and wide. Together, we can navigate the rough waters to reach a safe harbor. Together, we are wealthier and more secure.
Thank you, xiè xie!
