IMF Current Affairs - 2019

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IMF: World Economic Outlook, 2019

The World Economic Outlook is a biennial report that is released in April and October. According the report released recently on October 15, 2019, the global economy is at its slowest pace of growth at 3%. This is a serious climb down from 3.8% in 2017.

Key highlights of the report

  • The Global growth rate is projected to improve to 3.4% by 2020.
  • The growth of advanced economies is projected to slow down by 1.7%
  • The emerging and developing economies are projected to experience a growth pick up from 3.9% in 2019 to 4.6% in 2020.
  • The report downgraded India’s growth projections to 6.1% in 2019 and 7% in 2020.
  • According to the report, China is projected to grow at 6.1% in 2019 and 5.8% in 2020.
  • The trade volume reached the lowest since 2012. It reduced by 1% since 2012.

Justifications

  • About half of the economic slow down comes from shallower recessions in stressed emerging markets like Argentina, Turkey, Iran
  • Higher tariffs and prolonged uncertainty in the trade policy are the major reasons for dented investment and the slowdown in the growth. This is very well seen in the effects of trade wars and imposed sanctions
  • The automobile industry is contracting mainly due to the disruptions from new standard emission standards. This predominantly has effect in China.
  • Trade barriers and geopolitical tensions like Brexit is hampering investment, confidence and growth

Recommendations

  • The countries should support the economy slow down with tax-base enhancing measures, rationalizing subsidy-spending, efficient credit allocation and governance of public sector banks.
  • India should keep its Fiscal Deficit under check

Kristalina Georgieva appointed as new IMF chief

The Bulgarian Economist Christina Georgieva was appointed as the new head of the International Monetary Fund.

Kristalina Georgieva

Kristalina had served as Chief Executive in World Bank as well. Before becoming CEO of the bank in 2019, she had served in number of top positions in the Bank since 2008. In 2014, she served as Vice – President of European Commission. She had run the post of Secretary – General at the UN for a very short duration. Her tenure ended following a vote at the UN Security Council where Antonio Guterres gained its support.

She began her career at the World Bank in 1993. Her works and coordination towards disaster around the world in 2010 were applauded. It included floods in Pakistan, earthquake in Haiti and Chile, industrial accident at Ajka, Hungary and Romanian floods.

Awards

Georgieva was named “European of the year” in 2010. She was also awarded “EU Commissioner of the year” for her handling of humanitarian crisis in Pakistan and Haiti.

Responsibilities of IMF Chief

The responsibilities of IMF chief are defined in IMF’s Article of Agreement. According to the article, the chief shall coordinate the operating staff and the funds of IMF under an Executive board. He or she is responsible for appointment and dismissal of the staff of the Fund.

Selection Process of IMF Chief

The IMF chief is appointed by a 24 member Executive board. It is completely merit based. The directors of the board were allowed to file nominations for the post till 2011. After 2011, the appointments were based on managerial, diplomatic and professional skills of the director.

Indians in IMF

Indian born Gita Gopinath was the first Indian woman to hold a higher position in IMF. She joined IMF in 2018 as a Chief Economist. Before her the Ex – RBI chief Raghuram Rajan was the first Indian to hold the position of Chief Economic Advisor in the IMF.

Reports published by IMF

IMF publishes 2 major reports (1) World Economic Outlook – It is published biennially. It gives an overview and detailed analysis of the world economy by considering the issues of industrial countries, economies in the mode of transition and developing countries. (2) Global Financial Stability Report – It is also published twice a year. The report assesses stability of global financial market and emerging markets.

About IMF

IMF is an international organisation headquartered at Washington DC. It consists of 189 countries. IMF works towards global monetary cooperation, facilitates international trade and secures financial stability. It was formed in 1944 at the Bretton Woods Conference.