Governor’s statement on the spring meetings of the IMF and the World Bank

The main focus of discussion at the spring meetings of the IMF and the World Bank, which are taking place in Washington, D.C. this week, is the global economic situation, which is increasingly being impacted by the geopolitical situation.

The meetings offer an opportunity for a full and free exchange of views on the part of key policymakers able to influence the global economic and political situation, which is vital to successfully confronting the impact of the medical and geopolitical crises seen in recent years. This year we again find certain risks, most notably geopolitical risks, to be growing in strength.

The general assessment of those attending the meetings is that global economic growth remains relatively modest compared with previous decades. The most notable positive trend seen in the advanced economies is the exceptionally robust labour market, which to a lesser extent is also being seen in the less advanced economies.

Inflation remains at the forefront of economic discussions, where the feeling is that the inflation shock of recent years is slowly abating. Consequently our discussions are focusing on when to begin easing our measures to curb inflation, and with what intensity. In light of the above, the Governing Council of the ECB last week began discussing potential future steps. Banka Slovenije’s view is that the situation is increasingly right for beginning to ease the restrictive monetary policy stance. Future decisions will be driven by the evolving situation, where global geopolitical developments will be key, together with analysis of the inflation outlook, the developments in core inflation, and the effectiveness of our measures.

Given that the last few years have seen a medical crisis and a geopolitical crisis, which in recent weeks has gained a new epicentre, discussions are underway on the need for all policymakers to once again begin making proper preparations for the increasing likelihood of new shocks in the environment. The IMF is also warning of the importance of strengthening the resilience of systems, and regaining enough room for policy to mitigate their impact.

Two more changes are evident in the discussions compared with last year’s meetings. The situation in the banking system is more stable. However, cyber risks are increasingly coming to the fore, driven by geopolitical tensions, and are being felt in more and more of the world. They pose a threat to the economy, and to policy of all kinds.

It should also be noted, as ever, that as a small, open economy, Slovenia is profoundly affected by global developments. While we might be seeing slightly higher economic growth and a slower fall in inflation, we share the risks and the preparations for future policy decisions with the rest of Europe.