IMF releases 'G20 Surveillance Note' report

The report notes that monetary policy is expected to ease somewhat in 2024, but warns that medium-term growth prospects remain weak, reflecting challenges such as sluggish productivity growth, aging, geoeconomic fragmentation, and climate vulnerabilities.

The report states that fiscal sustainability is also being tested as public financing conditions remain challenging in the medium term due to high and rising levels of public debt.

ATTENTION DRAWN TO CLIMATE VULNERABILITIES

The report indicates that weak medium-term growth prospects also increase the risk of resorting to protectionism, which in turn exacerbates the threat posed by geoeconomic fragmentation that is already hindering trade and financial integration.

Emphasizing that climate vulnerabilities are putting pressure on medium-term global growth prospects, the report states that although the pace of globalization has slowed, growth opportunities—including in digital services trade and artificial intelligence—remain intact if properly leveraged.

NEED FOR COOPERATION HIGHLIGHTED IN THE REPORT

The report emphasizes that the appropriate combination of fiscal and monetary policy will be critical in ensuring debt, price, and financial stability.

Stating that multilateral action is needed to overcome global challenges and seize global opportunities, the report notes, "G-20 policymakers must accelerate efforts to mitigate the threat of climate change, support the climate transition, and help unlock Africa's growth potential."

The report stresses that cooperation is necessary to manage fragmentation, particularly by avoiding distorted trade policies, and to strengthen the resilience of the international monetary system. It also notes that the G-20 has an important role in ensuring that risks are minimized while fully leveraging the benefits of adopting artificial intelligence.

"ARTIFICIAL INTELLIGENCE HOLDS PROMISE FOR BOOSTING PRODUCTIVITY"

In a blog post titled "How the G20 Can Harness the Recent Resilience of the World Economy" regarding the report, IMF Managing Director Kristalina Georgieva stated that trends such as artificial intelligence hold the promise of boosting productivity and improving growth prospects.

Georgieva noted that geoeconomic fragmentation is deepening as countries shift trade and capital flows, and that climate risks are also increasing, already affecting economic performance from agricultural productivity to the reliability of transportation, and the availability and cost of insurance.

Georgieva assessed, "In the coming years, global cooperation will be essential to manage geoeconomic fragmentation and revitalize trade, maximize the potential of artificial intelligence without widening inequality, prevent debt distress, and respond to climate change."

Furthermore, Georgieva noted that because core inflation remains high in many countries and upside risks to inflation persist, policymakers should carefully monitor underlying inflation developments and avoid easing too early or too quickly. However, she also noted that in cases where inflation is clearly moving toward the target, countries should ensure that interest rates are not kept high for too long.

News Source: 12punto