IMF managing director Christine Lagarde on Thursday said that the slowdown in emerging-market economies could lead to rising inequalities in the global economy.
In the wake of China’s cooling economy and the steep fall in commodity prices, the emerging-market economies are seeing growth falter and are facing “a new, harsh reality,” Lagarde said in a speech at the University of Maryland.
“Growth rates are down, capital flows have reversed and medium-term prospects have deteriorated sharply,” the IMF head told a forum, according to the prepared text of her speech.
China posted its weakest growth in a quarter of a century last year, and Brazil and Russia are in recession.
The IMF now projects that income levels of the emerging and developing economies will converge to advanced economy levels at less than two-thirds the pace it predicted a decade ago, Lagarde said.
“This means that millions of poor people are finding it more difficult to get ahead. And members of the newly created middle classes are finding their expectations unfulfilled,” she said.
The consequences of the interconnected global slowdown would not be merely economic, she said: “It also carries with it the risk of rising inequality, protectionism and populism.”
To address the growing global weakness, Lagarde recommended that emerging-market economies improve their spending policies and increase non-commodity revenues.
And to boost growth, Lagarde called on both advanced and emerging economies to step up efforts to open up global trade systems.
Meanwhile, China’s economy can avoid a “hard landing” and shift to a lower, more sustainable growth rate if Beijing pursues reforms to state enterprises and sticks to a more market-driven and well-communicated exchange rate policy, Lagarde said.
“China is going through that massive, multi-faceted transition and we do not expect a hard landing,” Lagarde said.
However, Lagarde also said she anticipated increased demand from emerging markets for financial support from the IMF and other multilateral institutions as they struggle with slower global growth due in part to China’s economic transition.
Additional reporting by Reuters
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last