STORY: IMF maintains 2024 global growth forecast at 3.2 pct, warns of geopolitical tensions
SHOOTING TIME: Oct. 22, 2024
DATELINE: Oct. 23, 2024
LENGTH: 00:01:59
LOCATION: Washington
CATEGORY: ECONOMY

SHOTLIST:
1. SOUNDBITE 1 (English): PIERRE-OLIVIER GOURINCHAS, IMF Chief Economist
2. various of the press conference
3. SOUNDBITE 2 (English): PIERRE-OLIVIER GOURINCHAS, IMF Chief Economist

STORYLINE:

The International Monetary Fund (IMF) on Tuesday maintained its global growth forecast in 2024 at 3.2 percent, consistent with its projection in July, according to its newly released World Economic Outlook (WEO).

The level of uncertainty surrounding the global economic outlook is high, the report noted.
   
"Newly elected governments (about half of the world population has gone or will go to the polls in 2024) could introduce significant shifts in trade and fiscal policy," the report said.
   
"Moreover, the return of financial market volatility over the summer has stirred old fears about hidden vulnerabilities. This has heightened anxiety over the appropriate monetary policy stance -- especially in countries where inflation is persistent and signs of slowdown are emerging," it further said.
   
The report also noted that a further intensification of geopolitical rifts could weigh on trade, investment and the free flow of ideas. "This could affect long-term growth, threaten the resilience of supply chains, and create difficult trade-offs for central banks," it said.

SOUNDBITE 1 (English): PIERRE-OLIVIER GOURINCHAS, IMF Chief Economist
"Inflation came down while the global economy remained resilient. Growth is projected to hold steady at 3.2% in 2024 and 2025. On inflation, risks are now tilted to the downside. These downside risks include an escalation in regional conflicts, especially in the Middle East, which could pose serious risks for commodity markets."
   
In response to a question from Xinhua, IMF Chief Economist Pierre-Olivier Gourinchas said at a press conference that rising geopolitical tensions are "something that we are very concerned about," noting that there are two dimensions of the impact.

SOUNDBITE 2 (English): PIERRE-OLIVIER GOURINCHAS, IMF Chief Economist
"This is, of course a very important question. This is something that we are very concerned about, the rising geo-economic fragmentation, trade tensions between countries, measures of disrupting trade, disrupting cross-border investment. And when we look at the impact that rising trade tensions could have, there are two dimensions of this. One is, of course, increasing tariffs, for instance, between different blocs that will disrupt trade, that will misallocate resources, that will weigh down on economic activity. But there is also an associated layer that comes from the uncertainty that increases related to future trade policy, and that will also depress investment, depress economic activity and consumption. And when we put these two together, what we find is we find an impact on world output that is of the order of about 0.5% of output levels in 2026. So it's a quite sizable effect of both an increase in tariffs between different countries and an increase in trade policy uncertainty."
    
According to the latest WEO report, global growth is projected to hold steady, but there are weakening prospects and rising threats.
   
The growth outlook is very stable in emerging markets and developing economies, around 4.2 percent this year and next, with continued robust performance from emerging Asia, the report said.
   
Noting that the return of inflation near central bank targets paves the way for a policy triple pivot, Gourinchas said that the first pivot -- on monetary policy -- is under way already.
   
The second pivot is on fiscal policy, he noted. "After years of loose fiscal policy in many countries, it is now time to stabilize debt dynamics and rebuild much-needed fiscal buffers," Gourinchas said.
   
The third pivot -- and the hardest -- is toward growth-enhancing reforms, he said. "Much more needs to be done to improve growth prospects and lift productivity," he said.
   
The IMF chief economist noted that while industrial and trade policy measures can sometimes boost investment and activity in the short run, especially when relying on debt-financed subsidies, "they often lead to retaliation and fail to deliver sustained improvements in standards of living."
   
"Economic growth must come instead from ambitious domestic reforms that boost technology and innovation, improve competition and resource allocation, further economic integration and stimulate productive private investment," he added.

Xinhua News Agency correspondents reporting from Washington.
(XHTV)