IMF Targets 8% GDP Growth Rate For Developing Economies With Latest Global Policy Agenda
The International Monetary Fund (IMF) has unveiled an ambitious target to drive an 8% GDP growth rate for developing economies over the next four years, as part of its Global Policy Agenda.
Speaking at a media briefing on October 24, 2024, IMF Managing Director Kristalina Georgieva, outlined the Fund’s strategy which centers on securing a “soft landing” for global economies and steering them away from the low growth-high debt trap.
Ms Georgieva highlighted two key priorities to achieve these goals which are controlling inflation and reducing fiscal deficits, while simultaneously pushing for structural reforms to drive long-term growth.
She stressed that central banks, including the Federal Reserve, have already made significant progress on managing inflation, but further efforts are needed to finish the job without harming employment levels.
“The challenge now is to bring inflation back to target levels without unnecessarily damaging the labour market,” Ms Georgieva noted.
Addressing fiscal concerns, Ms Georgieva pointed out that, following years of necessary fiscal expansion to cope with economic shocks such as the COVID-19 pandemic and the war in Ukraine, it is now time to rebuild fiscal buffers.
“Rebuilding fiscal buffers is crucial, and in most countries, this can be done gradually—but it needs to start now,” she said, warning that high levels of debt continue to pose a threat to global economic stability.
The IMF’s global policy agenda places significant emphasis on pro-growth reforms, especially in developing economies. Ms Georgieva noted that cutting bureaucratic red tape and improving governance could lead to substantial economic benefits, potentially boosting output by up to 8% over the next four years in some regions.
“Our analysis shows that reforms, if properly implemented, can unlock economic potential across developing countries by up to 8% over four years,” she added.
Beyond addressing inflation and fiscal health, the IMF is urging global cooperation on broader issues such as climate change, technology, debt, and trade.
The IMF MD highlighted that the world is currently undergoing a massive transformation driven by both climate change and technological advancements. These shifts, she argued, require a coordinated global response to maximize the opportunities and mitigate the associated risks.
“Only by working together can we seize the opportunities presented by these great changes and protect ourselves from the potential disruptions,” she said.
The IMF’s Global Policy Agenda reflects the institution’s efforts to provide a clear path to recovery and growth for developing economies, which have been disproportionately affected by global shocks in recent years.
However, achieving the ambitious targets laid out by the IMF will require a delicate balance of inflation management, debt reduction, and structural reforms, all while navigating an increasingly complex global economic landscape.
