Gita Gopinath, Deputy Director General of the International Monetary Fund IMF, took the floor at a conference that took place today. Emphasizing that emerging markets are facing a more volatile and uncertain future, the IMF official said that these countries should rebuild their financial policies, increase their incomes, diversify their trade and be prepared for the costs of climate change.
Gopinath thinks external conditions are more challenging for emerging markets due to the growing geopolitical divide, tough financial conditions and rising costs of climate change. The IMF official stated that especially extreme weather events may bring extra costs on the debt plans of countries. Emerging markets, where agriculture is more dominant than developed countries, are more adversely affected by climatic conditions.
“Interest Rates Will Remain High”
IMF Deputy Managing Director Gita Gopinath expects global interest rates to remain high for an extended period of time. The official pointed to the negative supply shocks in the recent past as the reason for this comment. Gopinath also stated that the fragmentation of global trade poses a major threat to emerging markets and that this may adversely affect the GDPs of these countries.
“The pandemic and the Russia-Ukraine war raise concerns about supply chain security and broader national security.”
To meet these challenges, emerging markets need to adopt a fiscally and socially sustainable climate strategy, increase tax rates, continue structural reforms and diversify their trade flows, Gopinath said. Despite all these negative arguments, the IMF official sees greater opportunities in developing countries.
