Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), stated at the Asia-Pacific Economic Cooperation (APEC) summit in Lima, Peru, on November 15 and 16 that inflation is decreasing across the US, Europe, and Asia. She noted that this reduction has occurred without triggering a recession, unlike previous inflation spikes. She attributed the easing of inflation to effective monetary policies, improved supply chains, and stabilized food and energy prices. Georgieva forecasted that global economic growth would remain positive, with a projected 3.2% growth for this year and next, especially in the Asia-Pacific region.

However, Georgieva acknowledged that despite the easing inflation, many people in different countries continue to feel the pressure of higher prices, which remains evident in household budgets. She also pointed out that while global growth is expected, it is slower than the pre-pandemic era, where growth averaged 3.8%. The current medium-term growth rate is around 3%, which is compounded by the issue of high public debt that now stands at 100% of global GDP. Georgieva explained that high debt and elevated interest rates are making it more challenging for governments to manage budgets effectively, especially with growing demands for public spending in areas like education, infrastructure, and social services, particularly in aging societies.

She stressed that in this more fragmented world, trade is no longer the powerful engine it once was. The rise in protectionism and the growing use of industrial policies and trade barriers, fueled by national security concerns and the discontent from the losers of globalization, are evident. This year alone, over 3,000 new trade restriction measures are expected.

In such an environment, Georgieva emphasized that policymakers must focus on two key objectives: first, fiscal consolidation to prepare for future shocks while maintaining public investments, particularly in green and digital transformations; and second, implementing reforms to boost growth potential and promote job creation. These reforms should focus on mobilizing private capital, improving productivity, and, where necessary, strengthening institutions and governance.

Georgieva acknowledged the challenges in achieving these objectives, stating that fiscal restraint is unpopular and that even traditionally conservative political parties are now resorting to borrowing. However, she stressed the importance of adhering to prudent fiscal rules. Achieving the second goal of reform is also difficult, as public discontent has slowed the pace of change since the global financial crisis.

Despite these challenges, Georgieva expressed optimism, citing the example of resilient economies in the Asia-Pacific region. She highlighted the importance of well-designed policies, effective communication, and support for those who may lose out during the reform process. Georgieva stressed the need for investment in human capital, research, development, infrastructure, and labor market reforms. Additionally, she underscored the importance of building stronger capital markets and developing ecosystems that foster funding, knowledge, and professional networks, all critical in the age of artificial intelligence. The IMF, she assured, remains a supportive partner, ready to provide unbiased economic analysis, advice, and financial support to countries in crisis.