IMF Managing Director: "Global Economy Recovering but Faces a 'Long Uphill Battle' That Is Hard to Climb"

IMF to Upgrade Economic Outlook This Year... "Better Than Expected in Q2-Q3"
Concerns Over Uncertainty, Financial Risks, and Rising Debt Burden Due to COVID-19 Impact

Kristalina Georgieva, IMF Managing Director
Photo by Reuters Yonhap News

[Asia Economy Reporter Hyunjin Jeong] Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), expressed concerns that although the global economy, hit hard by the novel coronavirus disease (COVID-19), is showing signs of recovery, it is facing a "long ascent" that is difficult to climb.

According to the IMF, Georgieva stated in a video speech celebrating the 125th anniversary of the London School of Economics (LSE) that "the world is recovering from the mire. But this disaster is not over yet," adding, "Every country faces a long, bumpy, and uncertain path that is a difficult long ascent."

The IMF plans to revise upward the GDP growth rate for this year, previously forecasted at -4.9% in June, sometime next week. Georgieva said, "The economic situation in the second and third quarters was better than initially expected," and "a partial and uneven recovery is expected next year as well."

Georgieva pointed out that "the path (to economic recovery) is clouded by enormous uncertainty," noting that "health measures such as the development of vaccines or treatments could accelerate the pace of climbing the ascent, but if COVID-19 spreads again, the situation could worsen." She also highlighted risks of serious economic scars from job losses, bankruptcies, and educational disruptions, and predicted that in the medium term, the global economy will remain below pre-pandemic levels.

In particular, Georgieva mentioned significant risks in financial markets, including an increase in bankruptcies. She forecasted that national debt will reach a record high of 100% of GDP this year. Georgieva assessed, "Many countries have become more vulnerable, and debt levels have expanded due to fiscal measures responding to the crisis and declines in productivity and revenues." She also noted that economic imbalances have deepened, with unskilled workers, women, and youth suffering greater impacts from COVID-19, saying, "There are definitely winners and losers."

Georgieva stated, "It will be a very difficult path, and climbing the mountain of economic recovery requires a new path," emphasizing, "Simply restoring the old economy characterized by low growth, low productivity, high inequality, and worsening environmental crises will not suffice." She continued, "This is why structural improvements are needed to make the economy greener, smarter, more dynamic, and resilient," stressing, "Massive investments are directly necessary for a strong and sustainable recovery."

This content was produced with the assistance of AI translation services.