During the spring meeting of the International Monetary Fund (IMF) and the World Bank, Kristalina Georgieva, the head of the IMF, expressed concern about the global economy despite its surprising resilience in the face of challenges such as higher interest rates and conflicts in Ukraine and Gaza. While inflation has decreased, it remains a persistent issue, and government debt levels are rising worldwide. With government debts reaching 93% of global economic output last year, up from 84% in 2019, Georgieva emphasized the importance of countries improving tax collection and public spending to build fiscal resilience for future shocks.
One reason for this sluggish growth is the lack of productivity improvements. Countries have struggled to effectively utilize workers and technology, with low interest rates allowing uncompetitive businesses to remain operational until inflation forced changes in 2021. Additionally, an aging workforce in many countries has impacted economic dynamism and growth potential.
Despite these challenges facing the global economy, there are opportunities for countries to address productivity issues and promote sustainable economic growth. Georgieva suggested that countries could boost their economies by reducing bureaucratic obstacles and increasing female labor force participation. The United States has experienced stronger productivity gains compared to Europe due to its business-friendly environment and lower energy costs.
