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Dear MARIA, In today's edition, we highlight: Georgieva at Milken Institute Global Conference Gopinath on fragmentation Nigeria's reforms AI and Jobs in Developing Countries IMF Research Perspectives and much more

GLOBAL ECONOMY Georgieva: Remain “Cool, Composed, and Careful" (Credit: Milken Institute) Speaking at the Milken Institute’s 2024 Global Conference, IMF Managing Director Kristalina Georgieva advised attendees to be “cool, composed, and careful” when looking at the direction of the global economy. Asked by moderator Zanny Minton-Beddoes of the Economist whether she thought the global economy was in danger of unraveling, Georgieva noted the recent increase in industrial policy and warned that the world seems to have forgotten that industrial policy can lead to misallocation of capital. The “good news,” she said, “is that the world is not disintegrating...it looks like despite all the efforts to fragment, there is resistance from the common sense of businesses and countries.” Speaking at length on the situation in the US, Georgieva said there was good reason to be happy with the country’s performance. However, she noted the significant challenges the country faces; in particular, those of servicing the US debt. "It cannot go like this forever, because the...burden on the US is going to cripple spending that is necessary to make for servicing the debt. To pay 17-plus percent in debt service is just mind-boggling," Georgieva said. "There is an opportunity cost to this money...it doesn't go to emerging markets where it can finance jobs and business opportunities for American companies." In addition, Georgieva noted, the situation is not healthy for the economy long term: ”when the US faces problems, because of its incredible importance for the rest of the world, they transmit elsewhere,” she said. Watch the discussion

GLOBAL ECONOMY Gopinath: Rebuild Trust to Avert Fragmentation (Credit: Stanford Institute for Economic Policy Research) More and more, trade and investment flows are being directed along geopolitical lines, leading to increasing signs of fragmentation, the IMF's First Deputy Managing Director Gita Gopinath said in a speech at the Stanford Institute for Economic Policy Research. “If the trend continues, we could see a broad retreat from global rules of engagement and with it a significant reversal of the gains from economic integration,” Gopinath said. Fragmentation would also inhibit efforts to address other global challenges that demand international cooperation, such as climate change and AI, she added. To prevent fragmentation from worsening, Gopinath called for preservation and strengthening of the multilateral rules-based global trading system and the international monetary system. To do so, she underscored, will take pragmatic steps to rebuild trust. “The first step is to keep open the lines of communication and stay engaged,” Gopinath said. “Dialogue between the US and China, which we are now seeing, can help prevent the worst outcomes from occurring...the second step is to work together on areas of common interest. Take climate, for example. Over 70 countries have come together through the WTO’s Trade and Environmental Stability Structured Discussions...the third step is to limit harmful unilateral policy actions – including industrial policies.” While rebuilding trust is difficult and may take time, it is critical to avoid the worst outcomes in a rapidly fragmenting world, she concluded. Watch the speech

NIGERIA Fund Welcomes Reforms (Credit: peeterv/Getty Images Signature) In a statement marking the conclusion of Nigeria’s Article IV consultation, the Fund’s Executive Board lauded the bold reforms implemented by Nigeria’s new administration and commended the authorities’ focus on revenue mobilization, governance, social safety nets, and upgrading policy frameworks in the face of Nigeria’s significant economic and social challenges. In view of the downside risks, Directors stressed the importance of steadfast, well‑sequenced, and well‑communicated reforms to restore macroeconomic stability, reduce poverty, support social cohesion, and pave the way for faster, inclusive, and resilient growth. Growth is projected at 3.3 percent for 2024 for Nigeria as both oil and agriculture outputs are expected to improve with better security. The financial sector has remained stable, despite heightened risks. Determined and well-sequenced implementation of the authorities’ policy intentions would pave the way for faster, more inclusive, resilient growth, the statement noted. Read the press release

ARTIFICIAL INTELLIGENCE How AI Will Transform Jobs in Developing Countries (Credit: Vertigo3d/Getty Images Signature) The IMF’s recent report on AI kicked-off a discussion at the Center for Global Development (CGD) on AI’s  impact on labor markets and workers in emerging market and developing countries. Questions for discussion included: What are useful ways to think about AI’s impact on jobs across and within countries? How should developing countries craft policies and promote worker skills, digital infrastructure, and regulation to realize AI’s potential and minimize its risks? And how well prepared are developing countries to do this? Giovanni Melina and Marina Mendes Tavares of the IMF’s Research Department joined panelists Ajay Shah of the XKDR Forum in Mumbai and Brookings’ Louise Fox. The discussion was moderated by Shekhar Shah, CGD nonresident fellow.  Visit the IMF’s AI page for an overview of the Fund’s work on this topic. Watch the recording

RESEARCH PERSPECTIVES New Technologies, Digitalization, Artificial Intelligence The May 2024 issue of IMF Research Perspectives is now online, and offers a concise overview of digitalization, artificial intelligence, and other new technologies. The issue looks at trends and poses open questions to stimulate discussion and further exploration. The articles investigate the effects of these new technologies on productivity, labor market, and capital flows while highlighting the potential challenges to their broader use.

Even optimal economic policies create winners and losers, and that’s where politics steps in. Trade liberalization is an example of a policy that can make a country better off as a whole, but what happens to workers who lose out to cheaper goods? Jeffry Frieden, Professor of Government at Harvard University, says while politics is often messy, it’s how society puts a value on things economists can’t measure.

Weekly Roundup CLIMATE CHANGE Li on Meeting Paris Agreement Goals IMF Deputy Managing Director Bo Li delivered the Hsieh Memorial Lecture at Stanford University on April 25. He spoke about the macroeconomics of climate change including the fiscal and financial policy priorities to meet Paris Agreement goals; key policy recommendations ranging from carbon taxation to scaling up climate finance; and challenges and opportunities for international cooperation on climate action. PARTNERSHIPS Enhancing Institutional Capacity The IMF recently unveiled the first development partners of the Global Public Finance Partnership (GPFP): Belgium, France, Japan, Luxembourg, Germany, Netherlands, Sweden, Switzerland, and United Kingdom. The GPFP will become the main vehicle for providing fiscal capacity development to emerging and developing economies, with a principal focus on low-income countries and fragile and conflict-affected states. The GPFP will also help member countries progress on their domestic resource mobilization agendas. Concurrently, IMF First Deputy Managing Director Gita Gopinath participated in a signing ceremony with Guy Parmelin, Federal Councillor of Switzerland, on the Swiss contribution to the GPFP. The IMF also stepped up its capacity development cooperation with France (on the GPFP and francophone Africa), the Japan International Cooperation Agency (on courses delivered by the Africa Training Institute), and the Caribbean Development Bank (on the Caribbean Regional Technical Assistance Center). STAFF PAPER Challenges Facing Social Safety Nets in Emerging and Developing Economies The COVID-19 pandemic exposed the significant weaknesses of social safety net (SSN) systems in emerging and developing economies (EMDEs). While many countries scaled-up SSN coverage in response to the pandemic, this expansion appears to have been subsequently scaled back to pre-pandemic levels, leaving large gaps in coverage of poor households. For many EMDEs, the required spending increases to bridge the gap are prohibitive over the short term, making better targeting of households essential. The authors show how the standard social welfare framework can be used to assess the performance of social safety nets in terms of targeting efficiency and budget effort. STAFF PAPER The Impact of Reduced Commuting on Labor Supply and Household Welfare The COVID-19 pandemic reshaped the world of work in unprecedented ways, with “telework” or remote work emerging as an important force. This rapid transition has transformed how and where work is conducted and structured, challenging traditional norms around work time, commuting, and work-life balance. The ability to work remotely substantially reduces, if not entirely eliminates, commuting time, freeing up hours during the day that could be reallocated to other activities. These shifts in work and commuting patterns do not impact workers in isolation, but they can reshape the entire household’s decisions. In this paper, the authors analyze how time allocation has changed in the post-pandemic era, considering variations based on individuals’ gender and occupation.

MARK YOUR CALENDAR MAY 14, 2024, 8:30 AM ET IMF Regional Economic Outlook for Europe Tune in to the press conference in Brussels launching the IMF's Regional Economic Outlook for Europe. The REO will be presented by the IMF's Alfred Kammer, and will be followed by a panel discussion.  Watch the press conference

Thank you very much for your interest in the Weekend Read! Be sure to let us know what issues and trends we should have on our radar.

Miriam Van Dyck Editor IMF Weekend Read mvandyck@IMF.org