00:00Thank you so much. I am absolutely delighted to speak to the IMF MD.
00:03MD, there's so much to ask you about.
00:05First of all, you released this morning, thank you for joining us,
00:08you released this morning your World Economic Outlook.
00:10And actually, it's not too bad, but this is without any expectations of extra trade wars
00:14or the spit and spat that we're seeing over Greenland.
00:17How much do you worry about all of the trade concerns from 2025 coming back with a vengeance?
00:24Well, let's start with the good news that the world economy has proven to be remarkably resilient.
00:29We are projecting 3.3% growth for this year.
00:34We expect 3.2% next year.
00:38And when we look at the sources of this resilience, four things stand up.
00:45One, trade tensions have not been as dramatic as we feared.
00:53Two, private sector, incredibly agile.
00:57Three, and we don't talk enough about it, good policies.
01:02The fact that governments have developed tools to act responsibly for AI and the promise it holds.
01:10So, your question is correct.
01:14Would this resilience halt?
01:17Too early to say what exactly the impacts of new trade tensions is.
01:25But we know that when we have more uncertainty, bet for business, bet for households.
01:32But MD, does this feel different because this is something over Greenland, so this touches sovereignty?
01:38In 2025, what held the economy together is that not many countries retaliated.
01:43This could be different.
01:45Well, we shall see.
01:47I would not venture into speculations what is going to happen or not happen.
01:52What I would say is that it is very important that we recognize we are in a world of unthinkable happening.
02:04And in this world, I have one advice to people.
02:07Stay calm.
02:09Assess with no emotion where you might want to go.
02:14How difficult is it to assess the impact on the economy if we do have these extra 10% tariffs on certain European countries?
02:22Who would lose?
02:23We have run all kinds of simulations of what may happen.
02:28And what we do see in this simulation is that we deviate from keeping trade more or less on the right track.
02:36That could halt growth down.
02:39What I want to stress is that the best way forward, find a path to agreement.
02:49And that is going to be good for everybody everywhere.
02:54I mean, there's, again, quite a lot of, I guess, concern on the ground as President Trump arrives here that they've already left 70 international institutions.
03:02Are you worried that they could eventually leave the IMF?
03:06To be very frank, no, I think we are a great institution for the members, 191 of them, including the United States.
03:16So let me give you two reasons why I'm not worried.
03:19Number one, we cost no money.
03:22We actually work like a savings account.
03:25The U.S. lands money through us.
03:28We pay back with interest.
03:30For the last two years, the U.S. got $3.1 billion in interest from the on-landing they do with us.
03:37Number two, we actually are strictly focused on the economy and on reforms.
03:44And that is great for everybody's business, including for the U.S.
03:50And there is no other institution when there is fire, we come and we put it down.
03:55And when you look at the world today, Francine, do you know how many fires we are putting down?
04:00Many.
04:01Fifty.
04:02We have 50 programs.
04:04And, of course, our determination is to continue to serve the membership, to be good for business, to be good for households.
04:14You mentioned a lot to AI in your World Economic Outlook.
04:17How much AI investments are you expecting this year to help the global economy?
04:21Well, what we are seeing is that the enthusiasm to invest in AI is rewarded by profitability so far.
04:30So, what we expect is to see continuation of this flow of funding in AI at the cost of investing in many other worthy areas.
04:45We are not yet worried about frotting that may be like dot-com bubble.
04:53But we are cautioning people that they really need to follow very closely the productivity impact of investing in AI.
05:03So far, there have been gains, but will they be sustained?
05:10Remember, we were assessing the growth impact of AI between 0.1% and 0.8%.
05:18That's a big difference.
05:19And, therefore, the reward on investment is what we are a bit worried.
05:25Would it materialize with the scale and the speed that justifies this massive flow?
05:33MD, I also want to ask about two countries specifically.
05:35One, Venezuela.
05:37What do you think will happen in Venezuela, especially what we've seen over the last two to three weeks with the removal of Maduro?
05:42What is specific for our engagement with Venezuela is actually it is non-existent since 2019.
05:51Our membership did not recognize the authorities and at this point has not yet moved towards recognizing them.
06:02Nonetheless, we have kept a watchful eye on Venezuela all through this time.
06:08What we see is devastating.
06:11The economy shrunk dramatically.
06:15Inflation is on the rise.
06:17We worry about hyperinflation.
06:20Eight million people left the country in proportion to the population more than Ukrainians that run away from a war.
06:28So, how you turn this around, given that there is really no credible data, this is going to be extremely difficult.
06:37We are ready.
06:38If the membership says you're good to go, we will immediately step up engagement with Venezuela.
06:46And I can tell you for the people of Venezuela, I just hope that there would be that kind of progress soon.
06:54You've just come back from a trip to Ukraine.
06:56And there is a lot of talk here that actually Ukraine is being forgotten maybe at the margins because of everything else that's going on.
07:04Can you update us on your program there and whether you see the result from European leaders who actually do enough?
07:09Let me first say that going to Ukraine was very sobering because this is the worst winter, minus 20 degrees Celsius.
07:19This weather here is paradise in comparison.
07:24The city is cold, dark, but functional.
07:29And that impressed me tremendously that the streets are cleared so people can go to work, traffic lights work.
07:35And actually, everybody I talk to shows tremendous strength.
07:40I went to visit a power plant that was bombed.
07:43How cruel could you be to deprive kids from a chance to go to school because there is no heat, there is no electricity.
07:53And in 14 hours, they restored it for 75% of their consumer access to power.
07:59So there is that incredible strength of the Ukrainian people.
08:02So for us, it was demonstrably so throughout the first program.
08:08We had, as you know, eight reviews, all completed successfully.
08:12Now we are putting forward a new program for Ukraine.
08:16Very important anchor of macroeconomic and financial stability.
08:20So the 90 billion from the EU can flow into Ukraine.
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