00:00 Overshadowed by fresh Middle East violence and hosted by a country still recovering from
00:05 an earthquake, the week-long annual meetings of the International Monetary Fund and World
00:10 Bank wrapped up on Saturday.
00:13 Discussions in the Moroccan city of Marrakech ranged from the prospects for a world economy
00:18 weighed down by debt, inflation and conflict to the growing wealth gap between rich and
00:23 poor countries and floundering efforts to tackle climate change.
00:27 The new IMF outlook, signed off before the escalation of the conflict between Israel
00:33 and Hamas, sees global economic growth slowing from 3.5 per cent last year to 3 per cent
00:40 this year and 2.9 per cent next year, a 0.1 per cent point downgrade from a previous 2024
00:47 estimate.
00:49 Global inflation is seen dropping from 6.9 per cent this year to a still high 5.8 per
00:55 cent next. Central bankers signalled readiness to end interest rate hikes if events allow,
01:01 hopeful that inflation can be finally tamed without too hard a landing. Most agreed it
01:06 was too early to say how Middle East strife would affect a global economy which IMF chief
01:11 economist Pierre-Olivier Gouerinka's described as "limping along, not sprinting".
01:17 The heavy debt burdens of advanced economies, from the United States to China and Italy,
01:23 was a recurrent theme in the meetings, which came after financial markets in recent weeks
01:28 pushed US bond yields higher. Italian central bank governor Ignazio Visco said there was
01:34 an impression markets were re-evaluating the term "premium" as investors become more
01:39 nervous about holding longer-term debt. JP Morgan chair of global research Joyce Cheng
01:44 put it another way. "The bond vigilantes are back, and the great moderation is over,"
01:50 she told a panel of the two-decade era of relative economic calm before the 2008-09
01:56 financial crisis. One policy area where this could have a knock-on effect is the fight
02:01 against climate change. Victor Gasper, head of the IMF's fiscal division, warned current
02:07 subsidies-based policies were failing to deliver net-zero emissions and that scaling them up
02:12 would explode public debt. "Countries will need a new mix of policies with carbon pricing
02:18 at the centre," the fund concluded. Looking beyond the major developed economies, higher
02:23 policy rates, a strong dollar and geopolitical uncertainties are adding to challenges for
02:28 the rest of the world. Turkey was in the spotlight as finance minister Mehmet Simsk pitched its
02:34 reform plan. "The biggest structural issue is to bring inflation down and they're working
02:39 on it," said Murat Olcan, global head of emerging markets research at HSBC. Kenya is looking
02:46 to avoid slipping into debt distress and its central bank governor told Reuters it plans
02:51 a buyback of a quarter of its $2 billion international bond maturing in June, pushing its 2024 bond
02:59 up 1.2 cents on the dollar. One debt restructuring deal emerged; Zambia finally agreed a debt
03:06 rework memorandum of understanding with creditors including China and France. Progress on Sri
03:12 Lanka was less clear. Sri Lanka said on Thursday it reached an agreement with the Export-Import
03:18 Bank of China covering about $4.2 billion of debt, while talks with other official creditors
03:24 are stalling. High interest rates will put some borrowers in more precarious positions,
03:30 the IMF warned in its global financial stability report. Around 5 per cent of banks globally
03:36 are vulnerable to stress if those rates remain higher for longer, it estimated, and a further
03:42 30 per cent of banks, including some of the world's largest, would be vulnerable if
03:47 the global economy enters a prolonged period of low growth and high inflation. The Ukraine
03:53 war, growing trade protectionism and tensions between the United States and China are all
03:58 making consensus building tougher; in the end, there was not enough agreement to issue
04:04 the usual final communique at the end of the meetings. There was much talk ahead of Marrakesh
04:09 on revamping the IMF and World Bank to better reflect the emergence of economies like China
04:15 and Brazil. A US proposal to boost IMF lending power but save a review of shareholdings in
04:22 the fund till later won broad support. A pact announced on Saturday spoke of a meaningful
04:27 increase in quotas by end 2023 but gave few other details. Anti-poverty groups were sceptical
04:34 of what had been achieved. "The big theme this week is G7 countries papering over the
04:39 cracks of shattered promises," said Kate Donald, head of Oxfam International's Washington,
04:45 D.C. office. "Despite the wringing of hands about the billions of dollars needed to tackle
04:50 poverty and climate breakdown, there has been no sign of moving forward."