The International Monetary Fund (IMF) has urged states to adopt measures to restore confidence and avoid geoeconomic fragmentation, in a context in which the economy faces “perhaps” the greatest challenge since the WWII.
In a report presented this Monday, when it starts in Davos (Switzerland) the World Economic Forumthe IMF has asked states to prioritize four steps to restore global confidence: the reduction of trade barriers; promote agreements on the debt of vulnerable countries; modernize cross-border payment systems; and face the transformation towards green energy.
At a time when the crisis del coronavirus has overlapped with ukrainian war2,500 world leaders have been meeting since Monday at a forum, in which the IMF has published a report, signed among others by its managing director, Kristalina Georgieva, explaining why the international community must resist the geoeconomic fragmentation and how.
Restriction of trade in thirty countries since the Ukraine war
So far with the Ukraine War 30 countries have restricted trade in food, energy and basic productsaccording to data from the fund, which has warned of huge cost what this disintegration can mean for the states.
Technological fragmentation alone would mean falls of 5% of GDP for some countriesaccording to estimates by the fund, which has cited as an example the trade tensions of 2019, which led to a drop in world GDP of almost 1%.
The cooperation that has taken place over the last three decades has lift 1.3 billion out of extreme poverty of people, as the background recalls.
Reduce trade barriers
To restore this global confidence, it has made it a priority that international trade is strengthened to increase resilienceso that barriers are reduced to alleviate the shortage of products and achieve lower food prices, among others.
In his opinion, not only countries but also companies need secure supply chains and preserve the advantages for your business of a global integration.
Second, it proposes agreements for the debt restructuring of the most vulnerable countrieswhich would also have a positive impact on creditors.
45,000 million a year in the hands of intermediaries
On the other hand, the IMF proposes that cross-border payment systems be modernizedtaking into account that the average international cost of transfers is 6.3%, which means, according to their data, that 45,000 million dollars a year end up in the hands of intermediaries.
Lastly, it has raised another priority, the most relevant of all, which is that of take the climate change and the urgent need to accelerate the transition to energy.
The IMF acknowledges that there is no magic formula to restore global confidence, but adds that if the parties show an interest in solving the most urgent common needs, it will be possible to weave a stronger and more inclusive economy.
This body has recalled that the advantages of acting together were revealed during the pandemic, when governments took coordinated fiscal and monetary measures to prevent another great depression and to develop vaccines in record time.
This IMF report is made public before giving trade when the interventions of the world economic forum, to be held until Thursday where leaders of politics, business and civil society discuss economic challenges, again in person after the pandemic.