World economy ‘remarkably resilient’, driven by robust activity in US and emerging market economies

The world economy has been “remarkably resilient” despite a more challenging global environment, but better policies need to be in place to avoid entering a decade of sluggish growth and rising debt, the International Monetary Fund (IMF) chief said.

Global growth is marginally stronger, driven by better-than-expected performance in the United States and many emerging market economies, including India and Indonesia, said the financial institution’s managing director Kristalina Georgieva.

This was helped by strong labour markets, sustained household consumption, business investment and an easing of supply chain problems.

Sound fundamentals built over the past years were crucial for today’s resilience in avoiding a global recession and a period of stagflation, she said during an Atlantic Council event in Washington.

“We have seen a lot being done for strong macroeconomic policies and the payoff comes at this time of shocks,” Ms Georgieva said.

Still, global economic activity is weak by historical standards and growth has slowed. Policymakers need to deal decisively with inflation and debt, and promote economic transformation to boost productivity, inclusion, and sustainable growth, she said.

“In a world of more frequent shocks and heightened uncertainty, we need good policies more than ever.  Making the right policy choices will define the future of the world economy.”