IMF Chief Urges U.S. Policymakers to Pay Off the Deficit

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International Monetary Fund (IMF) chief Kristalina Georgieva recently urged U.S. policymakers to take advantage of the U.S. recovery from the pandemic and pay off the deficit.

Georgieva said policymakers should put the U.S. national deficit on a “decisive downward path,” in part to ensure investors do not start losing interest in U.S. treasuries. 

The IMF has a more positive outlook for U.S. inflation than the Fed does, expecting it to renormalize to 2 percent by the middle of next year. The Fed does not expect inflation to normalize to 2 percent until 2026

Global Growth Stronger Than Expected in 2024

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According to the International Monetary Fund (IMF), global growth is stronger than expected and will be 3.1% in 2024, the same as in 2023, as the US and emerging economies have shown resilience to previous crises, with strong consumption driving the growth.

The IMF has increased its previous forecast by 0.2%, in its latest World Economic Outlook report, factoring in upgrades for China, the United States, and large developing economies.  Global GDP is expected to accelerate slightly in 2025, by 3.2%.

Read the entire piece, including a mention about shaky growth in Europe.

Could Protectionism Make the World Less Resilient, More Unequal, and More Conflict-Prone?

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There is no strong evidence of a retreat from globalization, but international trade and the multilateral system that underpinned it are under attack, and their future depends on policy choices.

Today, there is still no conclusive evidence that international trade is deglobalizing. When measured in US dollars, global trade growth slowed after the global financial crisis in 2008–09 and declined sharply at the onset of the pandemic in 2020. But since then trade has rebounded to the highest value ever.

Read on to see how there are some growing threats to global trade.

Slowbalization After Global Financial Crisis

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Globalization has seen ebbs and flows over the decades. According to the International Monetary Fund (IMF), the “Slowbalization” that followed the global financial crisis has been characterized by a prolonged slowdown in the pace of trade reform, and weakening political support for open trade amid rising geopolitical tensions.

As the Chart of the Week shows in this link, globalization plateaued in the decade and a half since the global financial crisis. This latest era is often referred to as “slowbalization.”

Do the Benefits of Globalization Outweigh the Geopolitical Problems It Has Helped Create?

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Economic Counselor and the Director of Research of the IMF Pierre Olivier Gourinchas’ warning from the IMF’s World Economic Outlook in October 2022 underlined the significant slowdown in the global economy – and the reliance on global trade to function.

It raised questions about whether the many benefits of globalization outweigh the geopolitical problems it has helped create.

Read on to learn more.

Where Forecasts Went Wrong On Trade Globalization

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According to the International Monetary Fund, the prediction that expanding production networks and trade globalization would make the world economy less resilient turned out to be wrong. Why?

The question has two components: (1) Why did demand for traded goods boom? (2) How could supply increase to satisfy this unprecedented expansion of demand?

Read on about globalization and resilience.

Empowering Women Lifts the World

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International Monetary Fund (IMF) research has consistently underscored the benefits of equality, including greater productivity and financial stability. To mark International Women’s Day – celebrating the entire month – IMF presents a roundup of their most recent blogs, podcasts, and research on gender.

Check out how empowering women supports economic growth.

Today in Global Small Business: Global Recovery Will Be Divergent

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What's affecting me, my clients, my colleagues and other global small business owners:

• The International Monetary Fund (IMF) revised this year’s growth forecast upward for the Middle East and North Africa region and says recovery will be 'divergent.'
• Speaking of the latest developments in the global economy, the IMF has upgraded the world growth forecast!
• Millions of small shops in India have now become the next big target of tech firms to integrate technology into local shopping experiences.
• Global and local technology and financial services giants have embarked on a range of projects aimed at enhancing skills and diversity among small businesses in South Africa.
• Quote of the week:  “The world will not be destroyed by those who do evil, but by those who watch them without doing anything.” – Albert Einstein
• Managing divergent economies (by the IMF).  We are on firmer ground but there is a high degree of uncertainty.

The Great Lockdown According to Gita Gopinath, IMF

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As a result of COVID-19, the global economy is projected to contract sharply by –3 percent in 2020, much worse than during the 2008–09 financial crisis.

Gita Gopinath, Economic Counsellor at the International Monetary Fund says:

This crisis is like no other. First, the shock is large.  The output loss associated with this health emergency and related containment measures likely dwarfs the losses that triggered the global financial crisis. Second, like in a war or a political crisis, there is continued severe uncertainty about the duration and intensity of the shock. Third, under current circumstances there is a very different role for economic policy.

Read more from the International Monetary Fund on the nature of the pandemic shock:

• Foreword by Gita Gopinath
• Executive Summary
• Blog post
• Chapters (for example, Chapter 1:  Global Prospects and Policies)
• Statistical Appendixes
• Growth Projections Table

Which can all be found here.

Gita Gopinath is the Economic Counsellor and Director of the Research Department at the International Monetary Fund (IMF). She is on leave of public service from Harvard University’s Economics department where she is the John Zwaanstra Professor of International Studies and of Economics.

With the Coronavirus, Mask Options Just Aren't Available If You Are Sub-Scale

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In China, large corporations such as Apple Inc. supplier Foxconn Technology Co. have started their own mask assembly lines just to meet its workers’ needs. That option simply isn’t available if you are sub-scale.

And while bigger companies in China are largely back in operation, two-thirds of smaller ones still couldn’t get their employees to work as of last week, according to Beijing’s own government briefing.

Some say the situation could be even more dire in the U.S.  For example:

In its latest global financial-stability assessment, the International Monetary Fund found that while Chinese SMEs remain highly profitable — and large, state-owned enterprises are economic drags — the situation is just the opposite in the U.S. American SMEs are in the worst financial shape among countries in the survey, which looked at more than 1.3 million companies across major global economies. Over 60% of SME corporate debt is issued by borrowers that don’t make enough profit to cover their annual interest payments. In times of distress, it’s unclear that banks and the private-loan market will allow smaller businesses to refinance.

Read more about the state of China and determine for yourself whether they have a handle on things.

Are You Ready to Cope with a Fresh Economic Downturn?

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Bulgaria’s Kristalina Georgieva has said the global economy needs to be ready to cope with a fresh economic downturn after being chosen to head the International Monetary Fund (IMF) for a five-year term.

Georgieva said: “The IMF is a unique institution with a great history and a world-class staff. I come as a firm believer in its mandate to help ensure the stability of the global economic and financial system through international cooperation. Indeed, in my view, the Fund’s role has never been more important.”

Read more about heading off the threat of a global recession.

The Future of Tech Entrepreneurship Across Borders

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Invigorated by the promise of innovation, global entrepreneurs take it upon themselves to embrace the potential of the largely nascent and uncertain.

Whether it’s a mindset or a process to be mastered, the changing face and the future of tech entrepreneurship is poised to carry critical ramifications for the wider global economy.

In its 2018 World Economic Outlook report, the International Monetary Fund asserted that globalization was responsible for the acceleration of cross-border innovation. The growing emphasis on international collaboration, as well as trade and the use of patents, has significantly impacted production and innovation, especially in emerging economies.

Read more about what to believe in:  the future of tech entrepreneurship across borders that is open and accessible to all.

Risks to Global Growth Are Rising

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While the IMF has maintained its global growth forecast of 3.9% for this year and next, it has cut the outlook for the UK and the eurozone among others.

The outlook for the global economy has darkened as trade tensions rise and growth becomes uneven, according to the International Monetary Fund (IMF).

Read more on how Trump's tariffs will hurt global growth, the International Monetary Fund warns.

The Gilded Age Reboot Has Gone Global

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As Quartz says, "Big business just keeps getting bigger. And the US government’s de facto green-lighting of AT&T’s purchase of Time Warner last week is a sign of more corporate engorgement to come."

The gilded age reboot has gone global.

According to new research by the International Monetary Fund, it has among rich countries.

Read more here.

Global Superstar Firms

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The rise of the global superstar firm.  That is a warning buried at the end of the International Monetary Fund's (IMF's) report on the American economy.

The question becomes:  Are some businesses just too dominant, too big, for the overall good of the economy?

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The IMF - a membership organization of 189 nations - is careful not to name names.

And firms which some might think the target - such as Apple, Facebook or Google - point out that their success comes from providing products and services that consumers want.

"Markets reward success," as the article The rise of the global mega-firms -- why the IMF is worried, states.

Today in Global Small Business: WTO Proposes Agreement to Support E-Commerce for SMEs

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What's affecting me, my clients, my colleagues and other global small business owners:

• How technology can help small businesses save time with automation and have a global reach.
• Why The International Monetary Fund has urged governments to take action to tackle a record $152tn mountain of debt mountain.
• Register for the 2nd Annual Global Small Business Forum held in Chicago Friday, October 21st.
• World Trade Organization proposes a new global agreement to support e-commerce for SMEs.
• Why Walmart is doubling down on e-commerce investments and what we can learn by it.
• Should Alibaba be put back on the list of sellers of fakes?

Small Businesses Drive Exports

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According to The Telegraph, the World Bank and the International Monetary Fund are united in being positive about the British economy, confirming what folks in the UK, especially at The Federation of Small Businesses (FSB), have known for months.

The latest growth forecasts from the World Bank and International Monetary Fund (IMF) predicted brighter days for the global economy, with both reports reserving special mention for the UK’s performance.

Read the entire article:  Ensuring our small businesses realize their global ambitions is the best way to improve exports

Goes to show you that small businesses everywhere have an overwhelming desire to operate on a global level.

Tentative Global Trade Turnaround?

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World trade is beginning to pick up. But the turnaround seems to be tentative unless we make a concerted effort to export or import more.

In the U.S., the Commerce Department said Friday that the dollar value of exports, which surged in July, rose another 0.2% in August. That put exports at their highest level since December, but still 21% below year-ago levels. Lower oil imports reduced imports by 0.6%, narrowing the trade deficit to $30.7 billion after four months of widening.

Read more at "Trade Upturn Hints at a Recovery."

And check out the World Economic Outlook (October 2009) or IMF Data Mapper here.

Africa Grows

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Data recently released by the International Monetary Fund (IMF) reveals that while other regions of the world are experiencing economic decline, Africa has experienced significant economic growth over the past five years and is expected to maintain a positive growth rate of 3.5% for 2009.

To advance trade and investment flows between the U.S. and Africa, Corporate Council on Africa (CCA) -- a nonpartisan 501 (c) (3) membership organization of nearly 200 U.S. companies dedicated to strengthening the commercial relationship between the U.S. and Africa -- is gearing up to host its 7th Biennial U.S. – Africa Business Summit at the Walter E. Washington Convention Center in Washington, D.C. from September 29 – October 1, 2009, to which senior U.S. officials, including President Obama and Secretary of State Hillary Clinton, have been invited.  President Paul Kagame of the Republic of Rwanda will be attending.

Entrepreneurship will be the hot topic at the Summit, throughout various sectors such as infrastructure, natural resources, agribusiness, financing, power, health and tourism.  The event is expected to attract more than 1,500 participants, bringing together U.S. and African heads of state, cabinet ministers, Fortune 500 CEO’s, and heads of international organizations. Participants will have the opportunity to attend more than 50 industry-specific sessions and workshops.

Go here to register and get involved.

A World of Opportunity

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The International Monetary Fund (IMF) reports that the world is in the grips of a deepening recession. I look at it that we are in the grips of a world of opportunity. We just have to work smart at finding it.

Read more here.

Separately, I was a part of a vibrant panel discussion on global business early yesterday morning for Crain's Chicago Business. I met so many interesting people and I just want to say, "thank you" to all who came up to me after the talk to say nice things. One attendee, a trained psychologist who specializes in family business said, "One of your statements really resonated with me." And I quickly asked, "Oh, you mean the one about 'begin with the end in mind?'" He said, "No, the one where you declared 'make it very hard for people on the Internet not to find you." To him and everyone else who attended, I say, "nice to meet you and thank you for listening!"