Global economy resilient but ‘no room for complacency’, IMF committee head says amid Russia tensions

[BANGKOK] The global economy is showing great resilience but there is no room for complacency, the head of the International Monetary Fund’s steering committee said on Saturday (Oct 17), while divisions over Russia’s war against Ukraine sparked a walkout of delegates.

Saudi Finance Minister Mohammed Al-Jadaan, who heads the IMF’s steering committee, asked about the walkout by nearly half of delegates during remarks by Russia’s finance minister at a meeting on Saturday, said the important thing was that members ultimately agreed to the chair’s statement.

“We came here for a reason, and we achieved it. Look at this chair statement, it clearly says that all members agreed to the statement, so that’s what matters,” the chair of the International Monetary and Financial Committee told Reuters.

Al-Jadaan told a press conference that the global economy was demonstrating “remarkable resilience” in the face of profound ongoing challenges, including wars, threats to energy and food security, high public debt levels, and risks linked to the rapid development of artificial intelligence, while warning finance officials against letting down their guard.

“The message from the IMFC members is clear: There is no room for complacency,” Al-Jadaan said in the final press conference of a week of IMF and World Bank annual meetings that brought more than 18,000 people to Bangkok.

Fiscal authorities should work to rebuild buffers while protecting vulnerable populations and growth-enhancing investments, Al-Jadaan told reporters, underscoring the need for continued central bank independence and policies that supported private sector-led growth and investment.

He said IMFC members called for increasing support to countries that are facing short-term financing challenges caused by spillovers from wars and high energy prices.

“International cooperation remains critical to addressing excessive global imbalances and trade tensions,” he said.

IMF managing director Kristalina Georgieva called the meetings productive but said there was clearly heightened anxiety among members about increasing divergence.

Many lower income countries that were not part of the AI-value chain feared they were falling behind, she said.

“These meetings also have shown that in a world of repetitive shocks and geopolitical fragmentation, still there is desire for multilateral dialogue and cooperation,” she said.

The development committee, which groups the boards of both the World Bank and the IMF, touched on similar themes in its statement, underscoring the urgent need to end wars and conflicts to ensure sustainable growth and long-term stability.

“Our priority remains to promote macroeconomic and financial stability while enabling broad-based, private sector-led growth, and strengthening resilience through credible policies and international cooperation,” the committee’s chair, Swedish Finance Minister Elisabeth Svantesson, said.

Walkout amid tensions

Those comments came shortly after many IMFC delegates left the room when Russian Finance Minister Anton Siluanov addressed the group in Russian.

Bundesbank president Joachim Nagel told a bank event on the sidelines of the meetings that nearly 50 per cent of delegates took part in the walkout, sending a clear message to Russia.

“This is a very strong signal about solidarity and values. It would be the best for the world economy if this unprovoked war of aggression against Ukraine would end,” Nagel said. “I was really proud so many left this plenary.”

Ukraine’s central bank chief, Andriy Pyshnyi, told Reuters he was surprised by the large number of finance officials who left the room, calling it a “deep and emotional moment.”

The Bank of England confirmed that governor Andrew Bailey was among the delegates who joined the walkout, which comes ahead of Britain hosting the G20 in 2027.

European Central Bank president Christine Lagarde, who may be in the frame to take over as chair of the World Economic Forum, stayed in the room, two people in the meeting said.

Russia’s invasion of Ukraine in February 2022 has roiled the IMFC, preventing it from reaching consensus statements in the years since. There were deep divisions again this week as tensions flared between the US and Ukraine.

People in the meeting said those who left while Siluanov spoke included delegates from Britain, Germany, France, Denmark, Sweden, Finland, Norway, Lithuania, Latvia and Estonia, among others.

“The Ukraine war is existential for us in Europe,” one European diplomat said. “We cannot normalise relations with Russia.”

Germany on Thursday warned against ​efforts to bring Russia back on to the international stage after Siluanov attended a meeting of G20 finance ministers and central bankers, just over a month after the US hosted his first in-person G20 appearance since Russia invaded Ukraine, at a meeting in Asheville, North Carolina.

US Treasury Undersecretary Erin Browne told Reuters the same day that Washington, the current leader of the G20, supported Russia’s presence.

“We think it’s really important if you’re going to solve a crisis, you need to have open dialogue and open conversation,” she told Reuters. “And you can’t ​have ... dialogue, and you can’t have resolution to conflict if no one’s talking to one another.”

Ukraine’s finance minister participated virtually in the meetings, in order to focus on budget priorities at home.

Ukrainian President Volodymyr Zelensky, speaking at a European Union summit on Friday, blasted US President Donald Trump’s recent diesel deal with Russia.

EU leaders have rallied around Zelensky after Trump again criticised Ukraine and called its strikes on Russian refineries a “disgrace.” Trump on Friday waived a new congressional requirement to impose harsh sanctions on Russia. REUTERS