With the world economy hit by the biggest shock in the postwar era, IMF Managing Director Kristalina Georgieva, Christine Lagarde, President of the European Central Bank, Sri Mulyani, Finance Minister to Indonesia, and Ngozi Okonjo-Iweala, Board Chair at GAVI / AU Special Envoy on response to COVID-19 discussed the global economic outlook in a conversation moderated by CNBC anchor Geoff Cutmore on Thursday, October 15.
Georgieva stressed on the importance of using the COVID-19 crisis as an opportunity to build a more resilient future and that the IMF support would be aligned with policy advice on how the world can create dynamism in the economy by injecting more into innovation, digitalization, and low carbon solutions.
“It makes no sense to use money today to invest in the economy of yesterday. We ought to invest in the economy of tomorrow and do so with a sense that it is it is important to be a just transition. Inevitably, governments would be looking for ways in which they can raise revenues. They would need to do that. We are on the view that some progressivity in taxation and also reshaping taxation towards the shape of the economy of tomorrow would be necessary and would be positive for societies. We also would like to see very much concentration on quality of spending. So, moment of transformation not to be missed,” said the Bulgarian economist.
Mulyani gave an example of how Indonesia is taking hold of the opportunity to design it’s recovery path and not just restore growth by focusing on delivering most of the social safety net and small, medium, and enterprise support to benefit women and create more renewable and greener projects
“We are using this crisis in order for us to be able to transform the economy. I do hope that other countries also begin to sense that because this is exactly how the goodwill of the international community can be then matched with the commitment and leadership as well as the ownership of each country own program then they really want to do the right thing for their own country. And they really like doing it. So, they walk the talk and they prove it,” said Mulyani.
Dr Okonjo-Iweala urged the world to get back to a multilateral system and argued that this is what will serve the world and help it get out of this crisis instead of the bilateral deals that some countries are getting into now. She also shed a light on the importance on paying more attention to the needs of low-income countries during the COVID-19 crisis.
“People in rich countries can think, well, will stimulate economies, will come out of this we will buy vaccines from as many sources and we'll be fine. That is not true as long as people in developing countries and in poor countries are not safe. Nobody in the developed countries are safe as well. So, we've got to think of a solid, solidary approach. We've got to think of how we are going to work with those poor countries.” Said Okonjo-Iweala
Lagarde argued in favor of globalization and added that COVID-19 virus brought the world together while being physically distant. She also hoped that a vaccine won’t cause world-division.
“This virus has brought us together because we were all in it and all confronting the same issue. I just hope that vaccination is not going to divide us. And on that particular front, I think that while there has been a lot of criticism about globalization, about international trade governed by WTO, clearly trade is picking up. Trade is working. There is a degree of stabilization that is coming about when you look at certain numbers in terms of manufacturing being up, import and export picking up as well in various places, particularly those that are now coming out of this pandemic. So, we don't know whether globalization is going to continue to expand. But let's recognize that it has served us reasonably well most recently.” Said Lagarde
To watch the full debate, click here.