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IMF Acknowledges Global Economic Recovery Amidst Challenges, Urges Further ASEAN Growth

During the 43rd ASEAN Summit in Jakarta, Indonesia, on Tuesday, September 5th, Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), addressed the gathering, emphasizing the resilience of the global economy in the face of various challenges, while also underscoring the need for concerted efforts to propel the ASEAN economies forward.

Georgieva acknowledged that the world economy has endured a series of negative shocks, including the COVID-19 pandemic, conflicts, weather-related disasters, and a rising cost of living crisis. While the global economy is on the path to recovery, progress has been gradual and intermittent, resulting in substantial losses in production, amounting to trillions of dollars when compared to pre-pandemic levels.

She noted that the economic impact has been uneven across countries, with the United States being the only large economy to fully recover. The Eurozone remains approximately 2% below its potential, while China and other emerging markets, along with developing nations, continue to lag by around 5%, with low-income countries experiencing especially severe setbacks.

Despite robust growth exceeding 6% in 2021, the global economy has experienced a noticeable slowdown, primarily attributed to concerns stemming from the Russia-Ukraine conflict. The IMF anticipates continued global economic weakness, with growth projected to hover around 3% in the medium term, marking one of the lowest growth rates in decades. In the backdrop of persistently high inflation, interest rates are expected to remain elevated for an extended period, and there is an escalating risk of international discord.

Turning her attention to ASEAN, Georgieva expressed optimism, forecasting that the region’s economies are poised to expand by approximately 4.5% in the current year and the next. This is encouraging news, given that ASEAN contributes significantly to global economic growth, accounting for 10% of the total, more than doubling its weight. Georgieva attributed this success to past policy reforms.

Nonetheless, ASEAN faces significant challenges, including disruptions in supply chains and subdued international demand due to the lingering aftermath of the global panic. The region’s average growth over the past three years has been only half of pre-pandemic projections, and ASEAN has suffered a GDP loss of about 8%, exceeding the global average. Consequently, Georgieva stressed the imperative for ASEAN economies to accelerate their growth and sustain the trajectory that commenced before the pandemic era.

In conclusion, while the global economy demonstrates resilience in the face of myriad challenges, including the pandemic and geopolitical tensions, the IMF underscores the importance of continuous efforts to foster the growth of ASEAN economies. Such endeavors are pivotal in ensuring that the region not only rebounds from recent setbacks but also thrives, contributing to the global economic resurgence.

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