Inside Out | IMF, World Bank make desperate call for cooperation, but is anybody listening?

As weak growth and high debt forces the Global South to cut critical spending from education to climate mitigation, the Marrakech Principles are yet another rallying call for global cooperation in a divided world that seems likely to go unheeded

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A volunteer salvages furniture from homes damaged by an earthquake in Imi N’tala town outside Marrakech, Morocco, on September 13. Photo: AP

Published: 7:30pm, 15 Oct 2023

Overshadowed by the Gaza conflict, over the past week of outpourings from the International Monetary Fund’s annual meetings in Marrakech, the irresistible pressure has been towards doom and caution.

Severe shocks were “becoming the new normal for a world that is weakened by weak growth and economic fragmentation”, said IMF managing director Kristalina Georgieva. “Successive shocks since 2020 have pushed global output down by US$3.6 trillion as of this year.” This, according to the IMF, was producing “the weakest medium-term growth outlook in three decades”, with most forecasts “skewed to the downside”.

The good news for those of us in Asia is that regional growth is forecast to remain comparatively strong, at 4.6 per cent this year, the result of which is that Asian economies are expected to account for around two-thirds of global growth.

The bad news is that China has weakened as a growth driver, and if “a downside scenario where ‘de-risking’ and ‘reshoring’ strategies take hold”, then the output of those Asian economies most closely linked to China could fall by 10 per cent in the next five years.

So “strengthening multilateral and regional cooperation and mitigating the effects of geoeconomic fragmentation are increasingly vital for Asia’s economic outlook”, said the IMF in a blog released on Friday.

Such is its concern about the dangers of fragmentation that the IMF’s World Economic Outlook cites the word no less than 172 times. As the Financial Times’ Gillian Tett noted: “IMF economists (like global investors) fear that rising strife will undermine growth, not least by shattering global supply chains.”

.css-1m2rp1p{color:#34b8b5;}Inside Out | IMF, World Bank make desperate call for cooperation, but is anybody listening?

Inside Out | IMF, World Bank make desperate call for cooperation, but is anybody listening?