At the World Bank and International Monetary Fund (IMF) headquarters in Washington DC, imposing images announcing the commencement of the annual meetings of the fund and bank adorn huge walls: there are inscriptions advocating global trade, climate concerns, debt relief issues, as well as public health and other developmental challenges around the world, especially in developing economies.
Several metres away from the World Bank/IMF buildings, a small crowd of excited visitors and revellers gathered around Pennsylvania Avenue, overlooking the White House, the seat of the US president. Around the avenue, a small inscription announced some ongoing renovation efforts, ahead of the change of baton at the White House next year.
The IMF/World Bank meetings begin today, Monday, while the US elections have been scheduled for November 5. Both developments are central to conversations around global trade, multilateralism and economic growth.
“You could feel the pulse of the people; everywhere you go, there is a mixture of excitement and worry, especially among immigrants,” a Washington-based taxi driver who identifies himself simply as Bob, originally from Ethiopia.
“The election is very crucial,” he said, driving steadily through O Street, NW, Washington.
Economic experts and global finance chiefs are gathered in Washington this week to discuss the future of global trade, finance and related climate actions. The discussions hold amid uncertainty surrounding the wars in the Middle East and Europe, the Chinese economy and a crucial US.presidential election that could generate new trade battles and potentially weaken multilateral cooperation.
Last Thursday, the Managing Director of the International Monetary Fund, Kristalina Georgieva, said that she expected US presidential candidates Donald Trump and Kamala Harris to take a “very pragmatic” approach to the IMF and the World Bank.
Although Mr Trump has distanced himself from the project, the “Project 2025″ agenda by some Republicans calls for US withdrawal from the IMF and World Bank to pursue only bilateral development and financial aid in line with “U.S. interests”.
Ms Harris is expected to follow in the footsteps of the Joe Biden administration’s policy on trade, international cooperation and multilateralism.
Ms Georgieva said it was up to the American people to choose their leader because she has had a positive experience working with current and past US administrations.
“My experience with the US – any administration – has been always very positive… The US is very pragmatic. It brings a can-do attitude. It is demanding, and I like that,” she said.
But speaking further, she raised concerns about outcomes that could stifle global trade, noting that “major players, driven by national security concerns, are increasingly resorting to industrial policy and protectionism, creating one trade restriction after another.”
The US is the largest shareholder in both the IMF and the World Bank, which puts it in a strategic decision-making position: it holds effective veto power over major decisions.
Another major concern of experts at the IMF and World Bank annual meetings is the growing trade tension over a major flood of Chinese exports.
Ms Georgieva said last Thursday that China could grow at a significantly higher pace if it makes changes to give its consumers the confidence to spend more.
“China’s at the fork in the road. If they continue with their current model, which is export-led growth, there would be trouble. Why? Because the Chinese economy has grown to a point where China’s exports are no more a minor factor in global trade,” she told Reuters in an interview.
China can no longer rely on “some miracle that would retain an export-led model in this large economy as a viable vehicle,” she noted.
In the absence of domestic demand in China, manufacturing output has been diverted to exports, leading the US, Europe and others to raise tariff barriers to protect workers and industries.
Mr Trump has vowed to impose tariffs of 60 per cent or more on imports from China and 10 per cent on those from other countries, ostensibly as part of a return to his “America First” retreat from multilateralism.
Against the backdrop of concerns over trade restrictions, Ms Georgieva warned that trade “will not be the same engine of growth as before,” because restrictions are “like pouring cold water on an already-lukewarm world economy.”
She added: “We live in a mistrustful, fragmented world where national security has risen to the top of the list of concerns for many countries. This has happened before — but never in a time of such high economic co-dependence. My argument is that we must not allow this reality to become an excuse to do nothing to prevent a further fracturing of the global economy.”
Last week, World Bank President Ajay Banga credited Mr Trump for increasing investment in the International Bank for Reconstruction and Development during his presidency, which offers loans to middle-income developing countries.
“Then the question will be, how will the nuances of each administration be different? I don’t know yet so I’m not going to speculate on how to deal with them,” he said.
At the meetings, issues impacting economies in Sub-Saharan Africa will dominate discussions in addition to insights on Regional Economic Outlook on Friday, 25 October.
Abebe Selassie, director of the African Department, will present the latest outlook for the region, offering crucial insights into the region’s economic landscape.
Before then, on Wednesday, Wale Edun, Nigeria’s finance minister and coordinating minister of the economy, will be in a conversation on how to explore options for countries faced with liquidity challenges amid elevated development needs. The conversation will also focus on domestic reforms to boost growth and mobilise domestic resources, external financial support from multilateral and bilateral partners, and mobilisation of private sector inflows at affordable cost, including credit enhancements.
Mr Edun will also feature in a conversation on (debt) sustainability concerns, alongside Iyabo Masha, Director of the G-24 Secretariat; Ralph Recto, secretary of finance in the Philippines; and Candelaria Moroni, Undersecretary for International Coordination, Argentina.
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