The global battle against inflation has largely been won, but there are still big challenges facing the world economy International Monetary Fund chief Kristalina Georgieva said Thursday.

“First, we will cherish the good news, and rightly so, because we haven’t had much of it lately. The big global inflation wave is in retreat. A combination of resolute monetary policy action, easing supply chain constraints and moderating food and energy prices is guiding us back in the direction of price stability. And this has been done without tipping the global economy into recession and large-scale job losses, something we saw during the pandemic and after past inflation episodes, and which many feared we would see again. But we didn’t,” she told an audience of policymakers and media at the IMF headquarters in Washington, DC. 

But it’s not time to pop the cork and celebrate. There are still high levels of debt, stagnant productivity gains, and the threat of geopolitical war and instability in the medium-term, while climate change and funding the Green Transition are long-term challenges.

“Medium term growth is forecast to be lackluster, not sharply lower than pre-pandemic, but far from good enough. Not enough to eradicate world poverty, nor to create the number of jobs we require, nor to generate the tax revenues that governments need to service heavy debt loads while attending to vast investment needs, including for the green transition,” the Fund’s Managing Director warned. 

Georgieva said there are worrying signs that trade wars, protectionism and fragmentation may lower growth prospects.

“Going forward, trade will not be the same engine of growth as before. It is the fracturing I warned of back in 2019, right from this very place. Except it is worse. It is like pouring cold water on an already lukewarm world economy,” she warned.

Georgieva noted an optimistic tone, hoping that cooperation will win out over confrontation, she said in her speech ahead of next week’s Annual Meetings of the IMF and World Bank. 

“My appeal during this Annual Meetings will be let’s work together in an enlightened way to lift our collective prospects. Let us not take the global tensions us given, but rather resolve to work to lower the geopolitical temperature and attend to the tasks that can only be tackled together. Trade which has lowered prices, improved quality created jobs and is still showing remarkable resilience in the face of new barriers often flowing around them via third countries. But we need to recognize redirection can only take us that far, and we cannot assume it will continue indefinitely.” 

A full transcript of the event can be found at: Curtain Raiser Speech by IMF Managing Director Kristalina Georgieva at the 2024 IMF and World Bank Group Annual Meetings