Real social movements have real economic impacts
On Monday, January 21st, the International Monetary Fund (IMF) urged world leaders to take steps to avoid discontent in society, saying there are “real concerns” at the opening of the World Economic Forum (WEF) in Davos. “I think that what is important is not to wait for an escalation of political risks but that political leaders are concerned to avoid such discontent with the way things work,” said the new IMF chief economist Gita Gopinath at a press conference. “These are real concerns that need to be addressed,” she added in response to a question about political risks and, in particular, the “yellow vests” movement.
The IMF, which participates in the World Economic Forum for French president Emmanuel Macron cancelled his participation, now expects a growth of 1.5% for France for 2019, a decrease of 0.1 point compared to its October estimate, “due to negative impact of the protests”. The Fund also lowered the growth forecast for the global economy (-0.2 point to 3.5%) and the Euro area (-0.3 point to 1.6%) with even deeper declines for Germany (-0.6 point to 1.3%) and for Italy (-0.4 point to 0.6%).
Political leaders need to find solutions at the heart of the social movements that are gaining momentum around the world. These solutions may in some cases be bad for society, but they will be most certainly expensive in terms of economic growth.
Julien Moussavi, Head of Economic Research
Source: Beyond Ratings