On 21 October 2024 the IMF Managing Director Kristalina Georgieva delivered the opening speech at the IMF and World Bank Group Annual Meetings.

The global wave of inflation is currently decreasing owing to a combination of resolute monetary policy action, easing of constraints on supply chains and the moderating food and energy prices. The easing of inflation has occurred without a global recession or large-scale job losses. The resilience that achieved this came from strong policy and institutional foundations and from international policy cooperation. as countries learned to act together quickly. The global economy has benefited from central bank independence in advanced economies and many emerging markets; years of prudential reforms in banking; and capacity development worldwide.

Although inflation rates are falling, the higher price levels remain, and the situation has been the worst for the low-income countries. There is also a difficult geopolitical environment and expanding conflict which can destabilize regional economies and global oil and gas markets, together with a wide humanitarian impact. Economic forecasts point to a combination of low growth and high debt.

The forecast medium-term growth will not be enough to eradicate poverty or create sufficient jobs. The forecast levels of global growth will not generate the tax revenues that governments need to service heavy debt loads and investment for the green transition. There is high and rising public debt which is at much higher levels than before the pandemic.

The share of government revenue consumed by interest payments has grown as a result of high debt, high interest rates and low growth. Economic growth generates the tax and other revenues governments need to function and invest. As debt increases, fiscal space contracts disproportionately more in low-income countries. The growth of the interest-to-revenue ratio over time means that fiscal space is shrinking.

The international community must take action to raise economic growth potential, reduce debt and build a more resilient world economy. Governments must work to reduce debt and rebuild their fiscal buffers. Budgets should be consolidated by making difficult choices on how to raise revenues and increase the efficiency of government spending.

In the medium term, economic growth is the key to delivering employment, increasing tax revenues, creating fiscal space and supporting debt sustainability. There must be a focus on reforms.

In the area of employment, job markets must work for people. Economic migration can only help up to a certain point, because there is tension in many countries. Another possibility is to introduce more support for women coming into the workforce. Importantly, there is a need for reforms to enhance skill sets and match the people to jobs.

Capital must be mobilised and directed towards the right types of investments in the right places. A lot of funding flows into liquid but less-productive assets in a few major financial centres. Savings should be put to work for maximum economic benefit, and this needs action from policymakers to focus on eliminating barriers such as weak investment environments and shallow capital markets. Financial sector oversight must encourage prudent risk-taking and value creation.

Productivity must be increased, to obtain more output per unit of input. This can be done by improving governance and institutions, reducing bureaucracy and using the power of AI. More spending on education and R&D can also help. In the advanced economies, innovation is led by venture capital industries, ecosystems bringing financing, knowledge and advice, and professional networks. These can assess new ideas and identify the successful business ideas of the future.

Globally, the pace of reforms has been slowing since the global financial crisis as discontent has risen. Resistance to reforms is often driven by misperceptions about the reforms themselves and their distributional effects. Reforms can be developed through dialogue with the public; and accompanied by measures to mitigate the impact on vulnerable social groups.

Through international cooperation countries can work to lower the geopolitical temperature and tackle other problems that require cooperation. Trade has been resilient in the face of increased protectionism, and countries must work together to support the rules-based global trading system. Action on climate change requires countries to create fiscal space for the green transition, eliminate fossil-fuel subsidies, and ensure that capital flows to where it is most needed. Artificial intelligence has the potential to lift world growth by up to 0.8 percentage points but it is urgently in need of regulatory and ethical codes at a global level.