Biden-Xi engagement a signal for world to cooperate -IMF chief

U.S. President Joe Biden and International Monetary Fund (IMF) Managing Director Kristalina Georgieva listen, as Peruvian President Dina Boluarte speaks at the Leaders Retreat during the Asia-Pacific Economic Cooperation (APEC) Summit in San Francisco, California, U.S., Nov 17, 2023. REUTERS/Loren Elliott

SAN FRANCISCO  -International Monetary Fund Managing Director Kristalina Georgieva said on Friday this week’s meeting between U.S. President Joe Biden and Chinese President Xi Jinping is a badly needed signal that the world needs to cooperate more.

“It sends a signal to the rest of the world that we must find ways to cooperate on those challenges where no country on its own can succeed,” Georgieva told Reuters in an interview on the sidelines of the Asia-Pacific Economic Cooperation summit.

The Biden-Xi meeting is “important at a time when geo-economic fragmentation has indeed deepened with negative consequences for the prospects for accelerating growth,” Georgieva said.

Biden and Xi agreed on Wednesday to open a presidential hotline, resume military-to-military communications and work to curb fentanyl production, showing tangible progress in their first face-to-face talks in a year.

The meeting did not alter a growing array of national security-driven trade and investment restrictions between the world’s two largest economies, but Georgieva said the resumption of communications was important at a very uncertain time for the global economy.

Georgieva said the U.S.-China thaw had a positive effect on leaders at the APEC summit, where her key takeaway was that “the spirit of cooperation is demonstrably stronger. And the world does need it.”

Georgieva said revived U.S.-China communications will also help foster cooperation on global challenges, especially climate change, with the COP28 climate conference due to start at the end of November.

EGYPT LOAN TALKS

Israel’s war against Hamas continues to be “devastating” for the population and economy of Gaza, with “severe impacts” on the West Bank’s economy, Georgieva said as well.

It is also putting pressure on the neighboring economies of Egypt, Lebanon and Jordan, which are seeing reduced tourism and higher gas costs, she said.

Israel, too, will see an economic slowdown, as nearly 8% of its workforce has been diverted to military service, she said.

For Egypt, the IMF is “seriously considering” a possible augmentation of the country’s $3 billion loan program due to economic difficulties posed by the Israel-Hamas war. An IMF staff team is currently holding virtual consultations with Egyptian authorities on the program.

The Israel-Hamas war has had “a very, very limited impact” on the global economy as an initial run-up in energy prices was not sustained, but impacts could grow if there’s an “accident” that widens the conflict or it is prolonged, Georgieva said.