IMF cuts global growth forecast:"Uncertainty is playing a big role in the downgrade"

CGTN Europe

CGTN Europe interviewed Petya Koeva Brooks, Deputy Director in the Research Department of the International Monetary Fund (IMF)

Transcript

00:00Petra Koverbrooks is from the International Monetary Fund.

00:03Now, Petra, our correspondent called it guesswork, but you've presented a range of forecasts.

00:09Nearly all countries were hit with downgrades.

00:11So what would improve the outlook and what would make it worse?

00:15Well, what would make the outlook better is having clarity and cooperation and having

00:24a trade system that is stable and predictable.

00:28At this point, uncertainty is playing a big role in the downgrade and making it more

00:34difficult for firms to invest and for consumers to spend.

00:39So reducing that uncertainty would certainly be helpful.

00:43And then, of course, what would make it worse?

00:46We have a long list of things there, but further escalation in the trade tensions and further

00:52increase in uncertainty would certainly go in that direction.

00:58What those trade tensions between the US and China will have spillover effects around the

01:03world.

01:04But you say the risks to growth remain even if tariff reduction deals are struck.

01:09Indeed.

01:10Indeed.

01:11And we do show a scenario in which there is a pause in the tariffs on a permanent basis for

01:18all other countries.

01:20And with the only tariffs remaining being the ones that had escalated further between China

01:26and the US.

01:27And in that scenario, the global growth number looks very similar than what it is in our reference

01:34forecast.

01:35And a key reason for that is precisely that uncertainty that I was referring to.

01:40You know, if people don't know what comes next, it's very hard to hire people or to make

01:48any investments.

01:49But also in the report is the squeeze on foreign aid.

01:53What kind of extra pressure does that put on low income countries?

01:59That certainly makes it more difficult for low income countries that are already faced with

02:04a lower external demand and generally more difficult financing conditions.

02:11So the cuts in aid could push some of these countries further into debt or make it more necessary

02:21to have fiscal adjustment, which would have an immediate impact on growth and on living standards.

02:28You mentioned that uncertainty around hiring and around the workforce.

02:34The cost of living crisis lingers in many places around the world.

02:37The workforce is shrinking as populations are getting older.

02:42Is anyone playing close enough attention to all of that?

02:45Well, this is certainly something that we've been pointing to and trying to draw attention

02:52to that the demographics are playing a huge role in the slowdown in growth in the medium

02:58term.

02:59And one of the chapters in our report this time around is actually about the healthy aging,

03:05the rise of the silver economy and to what extent that could actually help and mitigate

03:11some of those pressures from demographics.

03:13Petra, it's always a pleasure talking to you.

03:17Thank you very much.

03:18Thank you very much.

03:19Thank you for being here for watching.

03:28Cliff, please.

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