Weekend Read: Asia Can Embrace Services to Boost Growth | WTO on the Benefits of International Commerce | Sub-Saharan Africa at the IMF's Board

In today's edition, we highlight:

• Asia's economies can embrace services to boost growth, productivity
• WTO Director-General on the benefits of international commerce
• Additional chair for Sub-Saharan Africa on the Fund's Board
• Middle East and North Africa Regional Economic Outlook Launched
• COP29 update, IMF Managing Director visits Egypt, and much more

ECONOMIC GROWTH

Asia's Economies Can Embrace Services to Boost Growth and Productivity

The Asia-Pacific region prospered by becoming the source of more than half of global factory output, but another transformation to higher-productivity services has the potential to further support growth, write the IMF’s Chikako Baba, Rahul Giri, and Krishna Srinivasan in a new blog.

Employment and production typically move from agriculture to manufacturing to services, as part of natural progression that comes with rising income. Today, many Asian countries are highly industrialized. If history is a guide, industry’s share of production will shrink as more activity passes to services. The growth of services has already drawn about half of the region’s workers into that sector; this shift is likely to accelerate with further expansion of international trade in modern services such as finance, information, and communication technology, as well as business outsourcing. By contrast, traditional services—for example, tourism or distribution services—have lower productivity and contribute less to economic growth.

“Policymakers should embrace this shift to modern services because they have higher productivity,” the authors write. “Transitioning to a more services-led economy comes with greater economic growth opportunities, provided the right policies are in place….With growth projected to slow in many Asian countries due to rapid aging, boosting productivity by nurturing productive services is a key to Asia’s future success.”

This blog is based on an analytical note, “Asia-Pacific’s Structural Transformation: The Past and Prospects,” included in the October 2024 Asia-Pacific Regional Economic Outlook.

GLOBAL TRADE

WTO Director-General Ngozi Okonjo-Iweala on the Benefits of International Commerce

WTO Director-General Ngozi Okonjo-Iweala delivered the Per Jacobsson Lecture at the IMF–World Bank Annual Meetings in October, calling for better communication about the benefits of international commerce.

“Trade is sometimes blamed and scapegoated for poor outcomes that really derive from macroeconomic, technological, or social policy for which trade is not responsible,” she said, warning that walking away from the trading system would diminish the world’s ability to respond to problems affecting people’s lives and opportunities. The memory of the collapse of the international order that Jacobsson observed a century ago echoes today, Okonjo-Iweala said, but the genius of the Bretton Woods institutions that followed is that it turned those vicious cycles into virtuous ones.

Jacobsson was a Swedish economist at the League of Nations and Bank for International Settlements in the 1920s and 1930s who led the IMF in 1956–63.

Today, the world needs new trade rules that fit the times, and countries can have interdependence without overdependence, said Okonjo-Iweala, an economist and international development expert who in 2021 became the first woman and the first African to lead the Geneva-based organization whose terms govern 75 percent of global trade.

“Over the past eight decades, the multilateral economic architecture, including the trading system, has delivered a great deal for the world,” Okonjo-Iweala said. “We have reinvented it before. We can do so again for people and planet.”

IMF BOARD OF EXECUTIVE DIRECTORS

Additional Chair for Sub-Saharan Africa Created

IMF member countries have successfully elected an expanded Executive Board of 25 Executive Directors, including three representing Sub-Saharan Africa.The completion of the Fund’s 2024 Regular Election of Executive Directors on October 25, 2024, was the final step in the creation of an additional chair dedicated to Sub-Saharan Africa, following the call by the International Monetary and Financial Committee (IMFC) during the 2023 Annual Meetings in Marrakech to improve Sub-Saharan Africa’s voice and representation and the overall balance of regional representation at the Board.

The expansion was implemented with the 2024 Regular Election of Executive Directors when the 45 Sub-Saharan Africa member countries, previously organized into two constituencies, were reorganized into three new constituencies: Central and Eastern Africa, Southern Africa, and West Africa.

“This is a historic milestone for the IMF and for Africa,” said the Fund’s Managing Director Kristalina Georgieva at an event to mark the occasion. “Not only does the addition of a third African chair to our Board reflect the continent's tremendous progress in developing its human and economic potential, it will also strengthen Africa’s voice and bring the IMF closer to the people we serve.”

The Executive Board was last expanded 32 years ago in 1992 with the addition of two new chairs to represent new member countries after the dissolution of the Soviet Union. The new Board’s term commenced on November 1, 2024.

MIDDLE EAST AND NORTH AFRICA

Regional Economic Outlook Launched in Dubai

Economic growth in the Middle East and North Africa and Caucasus and Central Asia regions is projected to strengthen in the near term, but only to the extent that current challenges abate, said the IMF’s Jihad Azour in Dubai October 31, launching the Middle East and Central Asia Regional Economic Outlook.

"This year, heightened uncertainty from ongoing conflicts and oil production cuts has impacted MENA,” said Azour. “But the region remains resilient, with growth projected at 2.1% this year and an anticipated increase to 4% in 2025. In this environment, prioritizing policy is essential. Steady reform implementation in areas such as governance, job creation (particularly for women and youth), investment promotion, and financial development will be crucial for enhancing resilience and boosting medium-term growth."

CLIMATE CHANGE

COP29 Update

The IMF will be represented in Baku, Azerbaijan for COP29 and is committed to fostering dialogue and knowledge sharing to support our member countries achieve our shared climate goals.

We will host pavilion events alongside the World Bank Group and the Financial Times, kicking off on Tuesday, November 12. Our pavilion program will feature insightful panel discussions with key leaders, including the Fund's Managing Director, Kristalina Georgieva ; Deputy Managing Director Bo Li; and Middle East and Central Asia Department Director Jihad Azour.

These discussions will also include experts from various sectors, ensuring a comprehensive approach to climate action. Sessions will be available on demand at IMF.org and YouTube shortly after the events conclude.

EGYPT

Managing Director Emphasizes Support

IMF Managing Director Kristalina Georgieva visited Egypt on November 2-3, marking a key moment emphasizing IMF support for Egypt's resilience and reform efforts. Discussions with President Abdel Fattah al-Sisi, Prime Minister Mostafa Madbouly, and cabinet members focused on boosting private sector reforms and attracting foreign investment. The MD also met with local entrepreneurs and civil society groups, underscoring the IMF’s alignment with initiatives supporting low-income groups and women.

FINANCE & DEVELOPMENT

Emerging Markets on the Global Stage

As advanced economies turn increasingly inward, emerging markets have an important stake in the defense against global economic fragmentation, the IMF’s Aqib Aslam and Petya Koeva Brooks write in F&D magazine.

Having grown in both size and global economic stature—on the back of greater integration and hard-won reforms—emerging markets are not only a permanent fixture on the world economic stage but also expected to be natural champions of the multilateral approach, the authors say.

“International organizations can lean more heavily on these natural allies, which have a growing stake in keeping the flame of multilateralism lit, to overcome the immense global challenges we face.”

IMF ANNUAL REPORT

Resilience in the Face of Change

The 2024 IMF Annual Report highlights the IMF's efforts to support its members through major challenges. These efforts include promoting macroeconomic stability, guiding countries back to fiscal sustainability, restoring inflation to target levels, and embracing transformative changes. In FY24 alone, the IMF provided $70 billion in loans to 30 countries, including nearly $15 billion to 20 low-income nations, bringing the total assistance since the pandemic began to $357 billion across 97 countries. The IMF also conducted 128 country assessments and allocated $382 million for practical technical support, policy-focused training, and peer-learning initiatives.

INTERNATIONAL PARTNERSHIPS

IMF Welcomes EU Support for Capacity Development

IMF Managing Director Kristalina Georgieva expressed gratitude to European Commissioner for International Partnerships Jutta Urpilainen at a signing ceremony at IMF headquarters October 25th. The ceremony was to commemorate capacity development-focused contributions from the European Union to the Global Public Finance Partnership (GPFP) and the bilateral Public Financial Management Partnership Program (PFM-PP2). The EU will contribute €15M to the GPFP and €8M to PFM-PP2. 

RICHARD GOODE LECTURE

Christoph Trebesch on Lending in War and Peace

On November 5, 2024, the IMF’s Fiscal Affairs Department (FAD) hosted Professor Christoph Trebesch (Kiel University) for the Tenth Annual Richard Goode Lecture. This lecture series, held in honor of the late Richard Goode who was the founder and the first director of FAD, invites top academics to present their cutting-edge research on topical policy issues before a broad audience of policymakers, think tanks, and staff from international organizations.

For this year’s lecture, Professor Christoph Trebesch delivered a presentation on “International Lending in War and Peace”, introducing his detailed database constructed by Sebastian Horn and Carmen M. Reinhart on official and capital flows across 200 years. He showed the increasing and decreasing importance of different official creditors and shed light on the crucial role of official lending to help avert financial collapse or military defeat. 

IMF PODCAST

As inflation and interest rates continue to decline and the likelihood of a recession slowly fades, financial markets have seen big equity gains. But the latest Global Financial Stability Report (GFSR) warns of several factors that could upend the recovery, including the apparent disconnect between market buoyancy and heightened uncertainty, especially related to geopolitical risks. Jason Wu and Nassira Abbas lead the IMF’s work on financial stability. In this podcast, they say while the near-term risks appear contained, medium-term prospects remain a concern.

Weekly Roundup

GENDER NOTES

Why a Gender Lens Matters: Unlocking Solutions to Macroeconomic Challenges

Promoting gender equality can drive sustainable and inclusive growth in the short to medium term and enhance labor force participation and productivity in the long term. This note emphasizes the importance of strengthening legal rights, addressing gendered fiscal policies, and improving work-life choices for women, alongside expanding capacity development to integrate gender considerations into public financial management through gender budgeting. The note provides a broad overview of the work the IMF has done in this area.

STAFF PAPER

Following the Money: Who is Keeping Coal Alive?

The 2023 United Nations Climate Change Conference reinforced already existing pressure to transition away from fossil fuels, in particular for the most polluting source, coal. This new staff paper sheds light on which type of banks continue to finance coal and how coal phase-out commitments affect coal financing. We find that coal financing is becoming increasingly concentrated, partly in banks with a very high coal exposure. We also find that many coal loans have maturities much shorter than the remaining lifetime of coal assets, thus exposing equity holders of coal assets to the risk of a more difficult loan rollover. 

FINANCIAL ACCESS

IMF Releases Survey Results 

The International Monetary Fund (IMF) released the results of the 2024 Financial Access Survey (FAS), marking the 15th anniversary of the FAS. The report “FAS: 2024 Highlights,” published along with the data release, summarizes the key trends on access to and usage of financial services over the past few years. Established in 2009, the FAS has played a crucial role in providing essential data to develop and evaluate financial inclusion policies, a topic of key relevance for the IMF, as it fosters broader economic participation, reduces inequalities, promotes inclusive growth, and aids in achieving the Sustainable Development Goals.

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

Miriam Van Dyck

Editor, IMF Weekend Read