Introduction: A world that has been stirred beyond recognition.
Minosh, thank you for your warm welcome! I am honored to celebrate the 25th anniversary of the London School of Economics and Political Science/KLOC-0. This is a proud moment for the students, teachers and alumni of your school.
Mark Warringer's sculpture just symbolizes the status quo we are facing today: our world has been completely changed by the epidemic-millions of people have lost their lives and billions of people have suffered the economic impact of the epidemic. The epidemic has had such a serious impact on low-income countries that we may face a "lost generation".
In order to fight this crisis, we can get inspiration from our ancestors. William beveridge, former president of London School of Economics and Political Science, published his famous report in 1942, which contributed to the establishment of the national medical service system in Britain. 1944, john maynard keynes and Harry Decatur White led the establishment of the Bretton Woods system, including the International Monetary Fund and the World Bank.
In the war, in the era of chaos, they created a better world. Now, we need to uphold the same spirit to create a more inclusive and resilient world after the epidemic.
This is the focus of the annual meeting of IMF 189 member countries to be held next week, and it is also the issue I will focus on today.
Second, global outlook: a long road to climb.
First, look at the current economic situation. In the second quarter of this year, there was an unprecedented decline in global economic activity, and countries accounting for 85% of the global economy were blocked for several weeks.
In June this year, the International Monetary Fund predicted that global GDP would shrink sharply in 2020. Now it seems that the situation is not so grim. At present, we estimate that the economic situation in the second and third quarters is better than expected, so we slightly raise the global forecast for 2020. We still predict that the global economy will experience an incomplete and unbalanced recovery in 20021year. You will see our updated forecast next week.
The global outlook has improved mainly because unconventional policies and measures have provided support for the world economy. Governments have provided about $65,438+02 trillion in financial support to families and enterprises. Unprecedented monetary policy measures have maintained the flow of credit and enabled millions of enterprises to continue to operate.
But countries have different abilities to cope with the crisis. Developed economies can do whatever it takes. Poor countries can only do their best.
This difference in crisis coping ability is one of the reasons for the different economic prospects. Another reason is whether the measures to prevent and control the epidemic and restore economic activities are effective. Many developed economies, including the United States and the euro zone, are still in a very painful downturn, but it is not as serious as expected. China's economic recovery is faster than expected. The economies of other countries are still suffering from severe shocks, and we have lowered our growth forecasts for some of them.
The situation in emerging economies and low-income fragile countries remains very unstable. Their health systems are weak and highly dependent on tourism and commodity exports, which are also the industries most affected by the epidemic. In addition, these countries are highly dependent on external financing. Adequate liquidity and low interest rates have helped many emerging economies to resume financing channels, but in sub-Saharan Africa, no country has issued foreign debts since March this year.
Therefore, the main message I want to convey is that the global economy is recovering from the abyss of crisis. But this disaster is far from over. All countries will now embark on a "long climb". This will be a difficult process, long, bumpy, full of uncertainty and easy to go backwards.
This is a mountain, and all of us are climbing with the same rope. The weakest climber will determine our overall progress. They need help when climbing the mountain.
The road ahead is overcast and full of uncertainty. If health measures (such as vaccines and treatments) make faster progress, we can "climb" faster. But the situation may also get worse, especially if there is a serious outbreak on a large scale.
Risks are still high, including the increase of corporate bankruptcy and the overvaluation of financial markets. Many countries have become more vulnerable. The fiscal policy adopted in response to the crisis and the serious loss of output and fiscal revenue have led to the rise of debt levels in various countries. We estimate that the global public debt will reach a record level in 2020, which is about 100% of GDP.
Unemployment of workers, bankruptcy of enterprises and intervention in education may also have a serious long-term impact on the economy. Considering the capacity loss caused by these factors, we expect that the global output will still be much lower than our forecast before the outbreak in the medium term. The process of improving living standards in almost all countries will go backwards.
The crisis has further exacerbated inequality, as low-skilled workers, women and young people are more affected. This crisis has obviously produced "winners" and "losers", and eventually a "tale of two cities" may appear. We need to find a way out.
Third, the way forward: fighting the crisis and promoting change.
So, what action should be taken in the future? We believe that there are four key tasks at present:
In all these areas, our member countries can rely on the help of the International Monetary Fund. We will help all countries climb the peak from beginning to end. We will try our best to act as a "mountain guide" for all countries. We will guide them through reasonable policy suggestions. We will provide necessary training for some member States. Most importantly, we will also provide financial support to help some countries tide over the crisis by reducing their debt burden.
We have provided financing to 8/kloc-0 countries at an unprecedented speed and scale. Our loan commitment exceeds $280 billion, of which more than one third was approved after March this year. We are also ready to take more actions at any time: in our total loan capacity of $65,438+0 trillion, we still have a lot of available funds for member States to use on their way up the mountain.
This is a difficult climbing trip. We need to climb to the top of the mountain along a new road. It is not enough to rebuild the old economy. We can't stay in the old state of slow growth, low productivity, serious inequality and worsening climate crisis.
This is why we need to implement fundamental reforms and build a more flexible economy-more environmentally friendly, smarter, more inclusive and more dynamic. We need to make large-scale investment in these areas, which is a necessary condition for a strong and sustainable recovery.
A new study by the International Monetary Fund shows that developed and emerging economies can create 33 million new jobs only by expanding the scale of public investment, which accounts for1%of GDP.
We know that in many cases, compared with the traditional fiscal stimulus, well-designed green projects can create more employment opportunities and generate higher returns.
We also know that digital transformation is accelerating, which is expected to increase productivity and create new jobs with higher wages. We can unleash this potential by reforming the tax system, investing in education and digital infrastructure. Our goal is that everyone can use the Internet and have the skills needed to succeed in the 2 1 century economy.
Fourth, conclusion: persevere!
All these can be achieved because we know that our ancestors had the courage and determination to climb the peak they faced. Now it's our turn; Standing in front of us is the peak we are going to climb.
As a climber said, "As long as you persist, you can reach every mountain top."
On our long climbing road, we should also adhere to the policies we have adopted to promote economic development. We are all tied to the same rope and climb together; We can overcome this crisis and realize a more prosperous, stable and beneficial world.
Thank you very much.