New Delhi :It is a pleasure to welcome all of you to the IMF Economic Review Summer Conference, jointly organized by Bank Al-Maghrib and the IMF.
I want to start by thanking Andrei Levchenko, the managing editor of the IMF Economic Review, the editorial team at the Review, and the staff at Bank Al-Maghrib for putting together such an amazing conference.
I sincerely regret that I could not be there with you in person today in Rabat—a beautiful city with an ancient past and a promising future. Indeed, we have a lot to learn from the trajectory of Rabat and Morocco—a story of both incredible resilience and transformation over the years.
We can take inspiration from Morocco’s story as economies around the world seek to strengthen their resilience amid increasingly dramatic shock, while embracing a transformational recovery that builds their potential for the future.
In that spirit, today and tomorrow, a distinguished set of academics and policy makers will discuss not only the immediate challenges ahead, but the critical medium and long-term issues facing emerging and developing economies—from structural transformation to trade, inequality to climate change, and beyond.
Getting these structural issues right is more crucial than ever given the increasing obstacles many countries now face to their recovery. Today, the global recovery is being weighed down by a confluence of calamities.
Just as the global economy was climbing back from the depths of the pandemic, we saw the health and economic impact of renewed surges of the virus—compounded by new economic shockwaves from Russia’s invasion of Ukraine.
In April, we downgraded global growth projections to 3.6 percent for both 2022 and 2023.
Since then, the war in Ukraine and sanctions against Russia have been escalated. The greatest impact is in Ukraine, but globally we are seeing weaker growth. Inflation has also remained persistently high and has broadened beyond energy and food commodity prices in many economies.
In addition to the war, recent strict lockdown measures in China are weighing on growth and risk causing further disruptions in global supply chains.
The bottom line: global growth is likely to be lower than expected, while inflation is higher.
We must also not forget that poverty and inequality are increasing.
- The pandemic is estimated to have pushed an additional 75 million people into extreme poverty in 2021, relative to pre-pandemic trends.
- High food prices, including due to the disruptions from the war in Ukraine, are expected to have significantly exacerbated this phenomenon, adding to the challenges facing the poor. We are already seeing how higher food prices and constraints on food supply are resulting in increased food insecurity, especially in the Middle East and Africa, where food accounts for 40 percent of consumers’ spending.
And if these challenges were not enough, downside risks also dominate the outlook. A worsening of the situation in Ukraine would heighten human and economic costs and increase global fragmentation. Higher-than-expected inflation would add to the cost-of-living crisis and could inflame social tensions. Associated tighter global financial conditions would add to challenges from high debt levels. A more protracted growth slowdown in China would further weigh on global activity.
All of these challenges have immediate consequences. But they could also leave long-term scars that drag down growth for years to come—especially for emerging and developing economies with limited policy space and generally lower vaccination rates. So even amid a confluence of calamities today, we cannot lose sight of the medium and long term. The actions we take now could make all the difference for the future.
That is why I am so glad to see so many talented scholars and policymakers represented in this conference. And I am confident that you will each actively participate to identify the existing problems and make progress toward finding solutions. I am proud that we are partners in this effort.
And though I could not join you in person, I am thrilled to be visiting Morocco in just about a year for the 2023 Annual Meetings in Marrakesh. I very much look forward to this—and continuing to deepen our excellent partnership with Morocco, this year and beyond.