IMF weekend read

 

Dear MARIA,   In today's edition, we highlight: Global Uncertainty is Here to Stay  Financial Repression in the 21st Century  Adapting to a World in Transition Chart of the Week: Positive Economic Sentiment Despite Surging Uncertainty Making European Reforms a Success on the Ground  Podcast: Gordon Hanson on Shifting Trade Alliances  Call for Papers: IMF MENA Annual Research Conference  GLOBAL ECONOMY Global Uncertainty is Here to Stay  (Credit: Iris Legendre ) “The global economy has proven resilient—but uncertainty is the new normal, said IMF managing director Kristalina Georgieva in her guest piece for The Economist’s World Ahead 2026 issue. Fragmented trade, fiscal pressures, social unrest, and rapid technological change are reshaping our world.   And according to an index co-developed by IMF staff, overall policy uncertainty is at a record high. “How these forces will interact is hard to predict. But it is already clear that the policy choices countries make today will define the ultimate shape of the emerging landscape.”   Georgieva highlighted several priorities: from bringing down debt and rebuilding fiscal space to reducing excessive external imbalances—starting with domestic macroeconomic adjustments. To boost long-term growth prospects, countries will also need to foster innovation and entrepreneurship and maintain trade as an engine of growth.” Read More RESEARCH Financial Repression in the 21st Century (Credit: IMF Photo/Nicholas Karlin) What keeps many policymakers up at night is dealing with high and rising debt burdens. It is, therefore, not surprising to see growing interest in the topic of financial repression, which typically involves taking measures to reduce the cost of servicing public debt. This was the focus of the 2025 Mundell-Fleming Lecture by Professor Ricardo Reis of the London School of Economics.   He outlined several possible measures, such as taxing the value-added of the financial sector, imposing a transaction tax on equity and fixed income flows, using unexpected inflation, or lowering debt returns. While such measures generate some revenue and offer short-term relief, the gains are often modest and come with negative side-effects. As IMF Chief Economist Pierre-Olivier Gourinchas put it: “Using financial repression is tempting but dangerous.” The Mundell-Fleming Lecture is the highlight of the IMF Annual Research Conference, bringing together some of the world’s leading academics and policymakers. Watch the Lecture RESEARCH Adapting to a World in Transition (Credit:IMF Photo/Nicholas Karlin) Are we ready to adapt to a world of profound structural changes and heightened uncertainty? This was the big question raised by another policy panel at the Annual Research Conference. London Business School’s Hélène Rey highlighted that recent policy actions—including tariffs, sanctions, and export controls—are prompting firms to adjust supply chains and investment decisions, leading to a “repositioning” of global value chains rather than aggregate fragmentation.   Sethaput Suthiwartnarueput, the former governor of the Bank of Thailand, stressed the importance of improved policy frameworks. They have enhanced the resilience of many emerging economies in the face of global shocks. And yet, this broader resilience masks significant heterogeneity across countries, and economies do remain vulnerable to shocks. He called for strengthened regional cooperation through “pragmatic pluralism.”   The panel discussion, which was moderated by IMF Chief Economist Pierre-Olivier Gourinchas, also featured insights from MIT's Kristin Forbes and ECB Chief Economist Philip R. Lane. Watch the Lecture Positive Sentiment Despite Uncertainty The Chart of the Week shows that a recent record monthly level for policy uncertainty was accompanied by relatively upbeat readings for the World Sentiment Index. The latest IMF forecasts also show that the global economy remains resilient and is slowing only modestly. This resilience can be attributed to improved policies, especially in emerging markets, alongside better business adaptability. However, elevated uncertainty may be a new normal. LEARN MORE EUROPE Making European Reforms a Success on the Ground (Credit: Francois de Ribaucourt) The biggest challenge for Europe's economy is no longer recovery—it’s productivity, said Alfred Kammer, director of the IMF’s European Department. Speaking at the launch event for the Regional Economic Outlook, he highlighted that, despite strong foundations, Europe’s income per capita still lags the United States by roughly 30 percent, a gap driven by slower productivity growth.   Yet even as Europe’s economy is cooling, its potential remains vast. This requires policymakers to act decisively: deepen the single market, remove barriers to labor and capital mobility, and empower Europe’s regional production hubs to innovate and scale up. IMF analysis suggests that such reforms could raise productivity by up to 20 percent.    Building on the themes of this latest research, Kammer also met with students in Albania, where he discussed opportunities in the region, the benefits of EU accession, and the reforms needed to lift growth in the Western Balkans. Read More PODCAST Gordon Hanson on Shifting Trade Alliances It’s not unusual for countries to reevaluate trade relationships as the global economy evolves. Yet the persistent uncertainty brought on by tariffs has prompted entire regions to reconsider long-established alliances and rethink new ones that were unimaginable only a year ago. According to Gordon Hanson, international economist and Professor of Urban Policy at the Harvard Kennedy School, we need to reinvigorate the process of building new trade agreements that reflect the new world. And middle-income as well as newly high-income countries should play a leading role. Listen to the Podcast CALL FOR PAPERS Rethinking MENA Integration in a Fast-Changing Global Environment The 2026 IMF MENA Research Conference will be held at Mohammed VI Polytechnic University in Rabat, Morocco on June 29-30, 2026.   The conference will bring together academics and policymakers to explore how the region can respond to external shocks through macroeconomic and financial policies; harness digitalization and AI to boost productivity and regional connectivity; and mobilize energy and infrastructure investment to support growth.   The Program Committee welcomes empirical and theoretical work focusing on the MENA region or contributions with a global or emerging market and developing economies perspective that have implications for the MENA region. A selection of the papers presented at the conference will be published in a special issue of Emerging Markets Review.   The deadline for submissions is March 31, 2026. Learn More 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.  Noha Elbadawy  Editor | IMF Weekend Read   nelbadawy@IMF.org Stay connected with the International Monetary Fund:       This email was sent to politikimx@gmail.com on behalf of: International Monetary Fund 1900 Pennsylvania Ave NW · Washington, DC · 20431