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

ASIA: A BRIGHT SPOT

During an interview with CNA on the sidelines of the event, the IMF chief spoke about the economic outlook of multiple economies in Asia, a region she sees as a bright spot in a turbulent global economy.

“Asia is where a lot has been done to build strong macroeconomic fundamentals. (To be able to tide through) crises, governments should focus on good policies and strong institutions, and (many Asian nations) have done it,” she said.

“Clearly, we see some Asian economies being very dynamic – India, Indonesia. We have seen their positioning in this new world being quite effective.”

The region is on track to deliver two-thirds of global growth this year, as it did in 2023, but she warned there is growing divergence among countries.

CHINA SHOULD SHIFT TOWARDS SERVICES

China, the largest economy in Asia, needs to boost domestic demand and shift more of its economy towards services, said Ms Georgieva.

She added China also needs to resolve its property sector woes decisively to boost confidence in the economy and improve consumer willingness to spend.

The IMF chief said China could increase its economic output by a substantial amount if it follows the Fund’s reform advice.

“Market-oriented reforms, reforms of state-owned enterprises, opening up and making sure that competition drives performance … we believe that such reforms can lift the output in China by 18 per cent over the next years,” she said.

“That is a significant shift that can benefit China …  and can also make China that continuous source of growth for Asia, and for the world. China making good choices would be good for everybody.”

JAPAN’S GROWTH “ABOVE POTENTIAL”

The IMF chief singled out Japan as having “above potential” growth, citing a strong and steady economic performance. The country largely benefitted from robust tourism since last year, she noted.

She added the Fund was “particularly impressed” with Japan’s actions on changes to its monetary policy.

To cope with an ageing population, Ms Georgieva said Japan needs to ensure that all productive forces in Japan are fully deployed, such as strengthening policies from the administration of late prime minister Shinzo Abe, which opened up more opportunities for women in the workplace.

“Yes, more women stepped into the labour force but mostly in lower end jobs. Opening up more chances for women to contribute more fully would certainly be good for the Japanese economy,” she said.

PAKISTAN NEEDS SOUND POLICIES

Ms Georgieva took a sombre tone with Pakistan, saying the nation has “a lot to do to get its economy on sound footing”.

She said that while Pakistan has taken some positive actions under the current IMF programme, its revenues are low by national standards and more needs to be done on the fiscal front.

In particular, its tax-to-GDP – at about 12 per cent – should be higher to support the economy, she said.

The IMF approved a US$3 billion bailout for the South Asian country last July, helping avert a sovereign debt default.

Ms Georgieva said the global lender will continue to work with the country on sound policies to stabilise and strengthen its economy.