The International Monetary Fund (IMF) expects the global economy to grow annually at an “anemic” rate of 3.2 percent in the next five years partly due to shrinking trade markets.
In the 2024 Annual Meetings Plenary by the IMF and the World Bank on Friday in Washington, D.C., IMF Managing Director Kristalina Georgieva said global trade volume has dropped below 4 percent since 2022 compared to nearly 6 percent during the pre-pandemic years.
She attributed the decline to governments’ protectionist trade policies brought by challenges in their national security.
“The world is fracturing, and trade is no longer the powerful engine of growth that it used to be,” Georgieva said.
Retreat from global economic integration
“The retreat from global economic integration — driven by both national security concerns and the anger of those who lost out from it — is visible in a mushrooming of industrial policy measures and trade barriers,” she added.
These statements came after Iran relaunched missile attacks against Israel this month allegedly to avenge deaths of its militant leaders.
Meanwhile, Russia has been pushing on invading Ukraine since 2021.
In Asia, the Philippines and some other Southeast Asian countries have been refuting China’s claims of ownership of the West Philippine Sea.
To ensure continuous domestic economic growth, Georgieva advised developing countries to increase investments in human resources, while reducing sovereign debt.
Labor market measures
“These reforms span labor-market measures such as skills enhancement and job matching, product-market measures to cut red tape and mobilize savings, and specific measures to foster innovation and raise productivity,” she said.
In the Philippines, most Filipinos worked in the wholesale and retail trade and repair of motor vehicles and motorcycles industry in August, with 1.15 million more employees than the figure recorded in July, according to the Philippine Statistics Authority.
Department of Finance Secretary Ralph Recto said the government aims to provide Filipinos more job opportunities in energy, manufacturing and digital technology.
Meanwhile, the IMF projects public debt to make up 9 percent of gross domestic product (GDP) in emerging markets, and 14 percent in low-income developing countries due to post-pandemic issues, such as funding for social services.
For the Philippines, Recto said the government aims to reduce its debt-to-GDP ratio gradually from 60 percent this year to 56 percent by 2028 or within the 70 percent IMF’s threshold.
Revenue distribution to critical sectors
Apart from jobs growth, Georgieva stressed governments should distribute national revenues efficiently to critical sectors like the environment.
“Domestic revenue mobilization will be critical for many countries to square this circle,” she said.
Georgieva said the IMF will continue to conduct consultations with governments in improving its financing programs for development projects in member countries.
“Our multilateral surveillance then pulls it all together to extract cross-cutting lessons for all. Again, the goal is to ensure that problems are identified and addressed early,” she said.