Weekend Read: IMF Managing Director Georgieva on the Outlook for the Global Economy | Geopolitical Risks | Energy Subsidy and Pension Reforms

In today's edition, we highlight:

• IMF Managing Director Georgieva speaks at Milken Institute

• IMF First Deputy Managing Director Gopinath on monetary policy in emerging markets

• Zambia's progress has been strong, says IMF Deputy Managing Director Clarke

• Benjamin Enke in F&D magazine

• Deputy Managing Director Okamura on San Marino's economy, and much more

GLOBAL ECONOMY

IMF Managing Director Georgieva Speaks at Milken Institute

In a world of more shocks and more volatility, the silver lining is that the impossible becomes possible, said IMF Managing Director Kristalina Georgieva in a discussion with the Wall Street Journal’s Gerard Baker at the Milken Institute’s 2025 Global Conference.

“What is amazing is that the world economy has proven to be remarkably resilient to these shocks. We had COVID, then we had the war in Ukraine, then we had inflation. Now we have aremake of trade relations in a very dramatic way. And yet, when you look at the performance of economies, it is actually impressive. Why is it that the world economy has been so resilient? It's a little bit related to the mission of the Fund, because since the [2008-09] global financial crisis, countries have worked hard to build sound macroeconomic fundamentals, and this is paying off at the time of shock,” said Georgieva.

Georgieva pointed to the example of Argentina, noting that the country last year saw its first budget surplus in more than a decade. “Bring inflation down, create conditions for the economy to prosper. Bring growth up. And what Argentina did, many would say it seemed impossible.”

When asked how she thought policymakers might respond given slower growth and accelerating inflation, Georgieva noted that she expected to see activity around trade relationsand more bilateral and plurilateral agreements.

“I also expect to see countries finally doing what they should have been doing anyway… First, trade more with each other. ASEAN now is going to integrate more; the Gulf Cooperation Council can integrate more. And secondly, think of the reforms we advocate for because of our mission and mandate – these fundamental changes should no longer be postponed or delayed.

 GLOBAL ECONOMY

First Deputy Managing Director Gopinath on Monetary Policy in Emerging Markets

Since early April, the US effective tariff rate has increased to levels last seen over a hundred years ago, and the uncertainty surrounding trade policy and geopolitics has surged. The economic effects of these developments are expected to be sizeable, said IMF Deputy Managing Director Gita Gopinath in an address in Istanbul, Turkiye at a conference of the National Bureau of Economic Research.

The Fund’s World Economic Outlook ‘reference scenario’ projects that tariffs will reduce both global and emerging market (EM) output growth by roughly 0.5 percentage points relative to the forecast prior to the April tariffs. Countries imposing high tariffs, or those that are heavily dependent on trade with those countries, will be hit the hardest. The Fund has downgraded its forecasts for 127 countries that account for 86 percent of global GDP. However, the impact on inflation is more varied, she noted.

“There are several reasons why economic outcomes could be much worse than our WEO reference scenario. As of now, financial conditions have not tightened much, including in emerging markets, and many EM currencies have remained surprisingly resilient against the dollar. If, however, trade policy discussions do not yield lower tariffs soon, financial conditions could tighten abruptly, with major effects on capital flows to EMs,” said Gopinath.

Gopinath discussed in-depth the ways EM central banks should steer through this fog. EMs have made major strides in improving their monetary policy frameworks, and this has enabled several of them to respond effectively to unprecedented shocks like the pandemic, she said. They are now being tested again as the global economic order is reset and uncertainty prevails. This uncertainty does not, however, imply gradualism in all matters. If inflation pressures rise, EM central banks will need to respond quickly using policy rates to prevent higher inflation from getting entrenched as they did during COVID.

“We must recognize that the road ahead may have many unforeseen turns, which calls for further strengthening financial and fiscal resilience and navigating with monetary policy clarity, credibility, and discipline,” Gopinath concluded.

 SUB-SAHARAN AFRICA 

Zambia's Progress Has Been Strong, Says IMF Deputy Managing Director Clarke

Progress on Zambia’s economic reform program supported by the IMF’s Extended Credit Facility has been strong, despite repeated external shocks, said IMF Deputy Managing Director Nigel Clarke at the conclusion of his visit to Zambia from May 4-6.

“Zambia’s remarkable progress has centered on restoring macroeconomic stability, including fiscal and debt sustainability, and implementing reforms. Notable reforms include the removal of fuel subsidies, strengthened debt management, and the roll-out of a reformed agricultural input subsidy—the e-voucher system—which increased competition in input delivery, reduced costs, and supported job creation,” said Clarke.

“These achievements have been particularly impressing given the challenging external and domestic environment. In my discussions with the authorities, I also welcomed their commitment to strengthen governance and anti-corruption policies.”

Clarke noted that he was leaving Zambia optimistic about the country’s future—"encouraged by the authorities’ determination to continue on their reform path, and reassured by the Zambian people’s resilience. The IMF remains a close partner in supporting the country’s journey to lift the living standards of the Zambian people.”

Pictured above: IMF Deputy Managing Director Nigel Clarke with Situmbeko Musokotwane, Zambia's Minister of Finance & National Planning

 F&D MAGAZINE

Reconnecting Morality with Political Economy

For much of the 20th century, the disciplines of moral psychology and economics were seen as distinct—each focused on separate concerns, with little cross-pollination. This wasn’t always the case.

For philosophers such as Adam Smith and Karl Marx, discussions of political economy were deeply intertwined with questions of morality. More recently, these fields have started to reconnect, recognizing that morality influences economic behavior, and vice versa, in profound ways, Harvard’s Benjamin Enke writes in F&D.

“This growing intersection offers valuable lessons not only for academia but also for policymakers grappling with today’s biggest challenges, such as greater inequality, political polarization, and diminishing trust in institutions.”

EUROPE

Deputy Managing Director Okamura on San Marino's Economy

San Marino’s economy has transformed in the last decade—from overreliance on the financial sector serving non-residents towards a diversified growth model driven by the manufacturing and non-financial services. The economy is in a much stronger position today, thanks to the authorities’ stewardship. Prudent fiscal policies, moderate wage growth, and access to international capital markets have allowed the country to weather the pandemic and the energy crises. Despite the regional slowdown and high global interest rates, San Marino’s economy continues to be resilient, with employment levels at record highs, said IMF Deputy Managing Director Kenji Okamura at the conclusion of a visit to the country.

“I commended the authorities for their ongoing efforts to reduce public debt. Pension reform and prudent wage growth policy have strengthened the fiscal position. We also discussed the challenges of fiscal policy in the current context of trade tensions and heightened uncertainty,” said Okamura, noting that the authorities’ efforts to reduce financial sector vulnerabilities, including resolving banking sector legacy issues and addressing nonperforming loans (via securitization and strengthened bank regulations) were also topics of discussion.

Okamura noted his appreciation for the excellent, long-standing relations between San Marino and the IMF, and that he was looking forward to strengthening the continued partnership through regular policy dialogue and technical assistance. 

IMF Podcasts

After years of economic turmoil, Argentina’s central bank chief has doubled down on efforts to restore confidence in the Argentine peso and normalize its economy. In this podcast, Governor Santiago Bausili and IMF Western Hemisphere Department head, Rodrigo Valdés discuss the challenging process of stabilizing Argentina’s bi-monetary economy. The conversation occurred in the Governor Talks series held during the IMF-World Bank Spring Meetings.

MARK YOUR CALENDAR

MAY 14, 09:00 AM (ET)

Conference on Public Debt Transparency: Aligning the Law with Good Practices

Low-income countries and emerging markets face rising debt, and much of it is hidden from the general public. The reasons for the gaps in debt transparency range from weak reporting obligations to inadequate monitoring, and weak accountability.

Legislation that promotes transparency can help bring the debt to light and address associated vulnerabilities. Domestic law reform is critical for enhancing public debt reporting and strengthening governance frameworks for sovereign borrowing.

Join Fund and other global experts on May 14 @ 9am (DC) for a Conference on Public Debt Transparency: Aligning the Law with Good Practices.

Register here:

Thank you again very much for your interest in the Weekend Read! Be sure to let us know in the comments what issues and trends we should have on our radar.

Miriam Van Dyck

Editor, IMF Weekend Read