German Chancellor Olaf Scholz held an annual meeting with the leaders of a number of multilateral global financial and political organizations — the IMF, WTO, ILO, OECD and World Bank — in Berlin on Tuesday, where a range of issues tied to international economic policy were discussed.
Scholz made a plea for pulling together during a difficult time.
"We can only confront our great challenges together," he said.
Scholz promised leaders gathered in Berlin that they could count on continued cooperation from Germany well into the future.
He also emphasized that deglobalization, decoupling and protectionism were not solutions.
Instead, Scholz advocated "smart globalization in which dependency can be reduced."
WTO boss: 'protectionism is very costly'
Visiting leaders also warned against protectionism, with World Trade Organization (WTO) Director-General Ngozi Okonjo-Iweala arguing that "Retreating from trade, being protectionist, will make it harder — not easier — to solve the problems we have now. Protectionism, decoupling, fragmentation is very disruptive and it will be very costly."
Okonjo-Iweala cited a WTO estimate predicting a 5% long-term reduction in global GDP should the world break into two trading blocks — one based on China, the other on the US.
International Monetary Fund (IMF) Managing Director Kristalina Georgieva told those gathered that with the coronavirus pandemic and Russia's attack on Ukraine, globalization was facing its biggest challenges since World War Two.
She, too, pleaded, "Don't pull the plug on trade that makes us better."
Georgieva called for diversification, but warned against shunning China, for instance.
Georgieva, Okonjo-Iweala and World Bank President Mari Pangestu all agreed that developing countries would be hardest hit if the global economy were to fragment. By some estimates these could see double-digit losses in GDP.
IMF chief gives grim economic forecast
IMF Managing Director Georgieva said economic growth in the world's two largest economies — the US and China — was slowing, suggesting that IMF global growth estimates for 2023 would likely have to be adjusted down from 2.7% as had been projected in October.
She said roughly one-third of the global economy and half of Europe's would move into recession in 2023.
Georgieva also said inflation would linger longer than expected, though would hopefully drop to about 6.5% next year.