00:00Well, let's talk now to Vicky Price, the international economist. Welcome back to the programme, Vicky.
00:04So, looking at this IMF report, growth should be higher than forecast this year, but the outlook is dim.
00:09So, do you regard this as good news or bad news?
00:13The interesting thing is that this year has proved slightly better, and the main reason it's proved slightly better is because of the tariffs in a peculiar way.
00:21Because everyone was expecting the tariff announcements in the US, everyone exported from across the world,
00:26whether you look at Europe, China, you know, what the UK has done as well, in order to beat the tariffs.
00:33And that's what's been going on.
00:35So, the first half was impacted by that of 2025, with the result that the IMF and everyone else who has looked at the forecast for this year has upgraded the expectations for 2025.
00:49But, of course, since then, we've seen quite a slowdown taking place.
00:53And that slowdown is really because this tariff uncertainty is still there, and the IMF is making a big deal about this prolonged uncertainty,
01:02which I think is, if it remains the case, that we still haven't got a clear road ahead on the tariff side,
01:09it will be affecting growth, as you rightly suggested, for the next couple of years.
01:14So, tariffs are obviously one big issue raised by the IMF.
01:18They also talked about this possibility of an AI bubble that could burst.
01:22Do you think we could see a damaging correction over that?
01:25Well, the extraordinary thing is that everyone is now talking about this.
01:29So, the more you talk about it, the more perhaps, you know, people will think that perhaps it is going to happen,
01:34and it is around the corner.
01:35But the worry has been that a lot of what we've seen recently in terms of the funding, raising of funds,
01:41buying into each other's companies and so on, has been concentrated in a few big firms,
01:46which are involved with each other, if you like, both as suppliers and also as taking stakes,
01:51in those other companies that are also supplying them, and a lot of investment is going to be needed in these areas.
01:58That investment, of course, is going to be costly.
02:00Interest rates remain high.
02:02If a lot of debt is used for it, then if something goes wrong along the line,
02:07what you might find is, indeed, that the whole thing collapses.
02:10I think those are the worries.
02:11We see that affect markets every now and then, but for the moment, I think, in this area, they remain relatively bullish.
02:18So, we've got this dim outlook, as described by the IMF.
02:21Is there anything that you could see coming that could turn that around?
02:27Well, yes, a little bit more stability would be rather good.
02:30And, of course, one big area that the IMF is covering is interest rates.
02:35We've seen, of course, bond yields being quite high in the U.S.,
02:39and their own interest rates also staying high in terms of short-term rates by the Fed.
02:44We've seen that happen also in places like the U.K.
02:47What they are stressing is that if there is a question of inflation,
02:51the interest rates perhaps need to stay high, and that's a problem.
02:54But where you can bring interest rates down, then they think it's possible.
02:59And they are highlighting that quite a lot of emerging countries are able to do more
03:04in terms of their own policies for the central banks.
03:08And also, of course, if you look at what may be happening in other parts of the world,
03:12you still have the likes of China sort of growing just under 5% in their forecast.
03:18You have quite a lot of the emerging world still doing well.
03:21And I think that's good news.
03:23So it means that they have managed somehow or other,
03:27and I think the IMF is stressing that,
03:29to be able to carry on despite all those uncertainties that are out there,
03:33which is good news in terms of giving us a bit of comfort, if you like, for the future.
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