Despite most of us still getting into the rhythm of university, the pace of global economy seems to be faster than ever. With gloom perspectives for Europe’s economy and a fast approaching Brexit deadline, every day there a new piece of information that changes the rule of the game. As hard as it is to keep up with everything, almost everyone seems to be on the same page when it comes to avoiding another global recession. What better way to get more information on what is happening behind the scenes, than joining Room for Discusssion in a dialogue with the chief economist of the IMF, Gita Gopinath. Be sure to join them on the 18th of September in the E-hall to understand the mechanism behind the organization which will most likely fight to avoid any disturbances.
Gita Gopinath has been working within the International Monetary Fund for about a year. She received a PhD. from Princeton University in International Macroeconomic and Trade. Her insights on the neutrality of border taxes will be very interesting to hear in relation to current US trading policies. Furthermore, with European trade threatened by the spread of populism, the action plan from the IMF will be an important determinant in maintaining monetary and economic stability.
However, in order to properly understand the stances that the IMF can take it is important to recap what is within the organization’s power to do. Most of us rapidly associate the institution with lending. A country is defaulting on its debt? Fear not, the IMF is there to give them a hand. Of course, nothing comes for free, and as the word-choice already implies, lending is not granting. By looking at their 2018 financial statement on financial risk management it is noticeable that the outstanding credit is slowly decreasing and over-due payments along with it. Maybe something to think about for when Ms Gopinth is here on Wednesday. Why is this? Is it due to countries becoming more and more reluctant to borrow from the IMF? Or maybe things are going very well globally in the budgeting department. Regardless, along with lending the IMF also safeguards monetary policy application for the helped countries. As such, the Central Banks are “quizzed” on their transparency, discipline, autonomy, accountability and responsibility. With many powerful political figures arising in every corner of the world it might be a true patience exercise from the IMF to sustainably deal in maintaining an eagle-eye view on everybody. Lastly, the organization is also engaged in a series of monetary education programs for developing countries, which aims at creating stabilization and growth.
Now coming back to our main problems of interest. What can the IMF do to avoid another economic downturn in Europe? A few days ago another stimulus package was announced from the European Central Bank with record low deposit rates, at -0.5%. Not only does this not sound good, but after a time of absence, the quantitative easing programme is also coming back. This comes in response to unexpected contractions in production across the whole area, with a focus on Germany. It could not have been a more appropriate time to discuss the predictions and action plan of the IMF. Brexit does not help either. What does the IMF think about it and what are their predictions, might be worth to find out.
All in all, it is prime time to talk about stimulus packages and monetary intervention. Possibly not the most positive Wednesday, but likely a very informative one. Be sure to drop by and catch a glimpse of the interview.