Concerned over the COVID-19 pandemic having widened inequality, IMF Chief Kristalina Georgieva said on Tuesday all hands are needed on deck, be it businesses, governments or even central banks, for a sustainable and balanced recovery. Speaking at the World Economic Forum’s online Davos Agenda Summit, she said the IMF is projecting 5.5 per cent global economic growth for 2021, which is higher than before.
“But, we won’t be winners after this crisis, unless capitalism globally brings people closer together," Georgieva said. She also called for stepping up the action to support low-income countries.
“Just to give you the number that is staggering, big countries are reporting 20 per cent GDP in support during this crisis. In poor countries, it is 2 per cent of GDP and their GDP is tiny," she said. Participating in a panel discussion on ‘Implementing Stakeholder Capitalism’ during the summit, the IMF Managing Director said, “In 2021 we are going to be looking at the race between a mutating virus and the vaccines; the resolve of policymakers to continue to support the most vulnerable, including young people, women and low-skilled workers; and the need to revitalize global cooperation." “It was not up to par last year," she added.
Georgieva said the pandemic has made us more sober, so we reevaluate what matters in life and this brings opportunities to transition to a green economy. WEF Founder and Executive Chairman Klaus Schwab, who also participated in the panel discussion, has argued in a new book that stakeholder capitalism is needed to create a better world that serves people and the planet.
The panelists discussed how companies, investors and governments can work together to advance this long-term approach to capitalism around the world. Chrystia Freeland, Deputy Prime Minister and Minister of Finance of Canada, said COVID-19 is still around and “that is the first priority and that is the 100th priority." She said while one part is the health fight — getting vaccines and putting the measures in place to stop the virus spread, the second part is the businesses fight — to provide economic support to people and businesses.
The Canadian leader called for balancing social and green targets by focusing on targets that address both people and the planet. “For example, Canada is committed to planting 2 billion trees, supporting the planet and adding jobs. We can be a lung for the world," she said.
Salesforce CEO Marc Benioff argued that the business of business used to be business, but “today, the business of business is improving the state of the world." “The public is counting on us to make the right calls more than ever before," he said, citing the Edelman Trust Index showing businesses were more trusted by the public than governments. “CEOs are more committed to running businesses for all stakeholders, not just shareholders. This is a pivotal year to look at the evidence. CEOs are the heroes of 2020," he added, citing the progress on vaccines.
“In the pandemic, it was CEOs in many cases all over the world who were the heroes," he emphasised. BlackRock Inc Chairman and CEO Larry Fink said transparency will allow capitalism to flourish.
“2020 was a pivotal year. We saw an extraordinary shift in how investors invested across every industry you see a widening gap between the best performing and worst," he said, asserting that much of it is caused by stakeholder capitalism. “We are going to need USD 50 trillion in investing to get to a net-zero world. It’s not a small price tag, but the opportunity is going to be large," Fink said.
Referring to changes being brought in by technology in how we invest, he said, “As more companies report and we have better data at each corporate level, we are going to be able to customize and personalize portfolios. That’s going to be the difference in companies that succeed and ones that don’t." The IMF chief said the past experience shows that pandemic increases the inequality. “And it is so overwhelming, within countries we see part of the economy doing very well. Those employed are flourishing, in other parts, it is collapsing… We need governments to have that redistribution role." “It will be even more important for companies to do the right thing, for governments to do the right thing and how do we create access to opportunities through optimisation so that young people can really borrow money and start businesses as part of a vibrant capitalism," Georgieva said.
“I see for all of us a role. I actually argue that we need all hands on deck.We need businesses to do its part, we need governments to do their part and by the way, talking about central banks, they are also playing an incredible role to swiftly provide assistance," she said.
She called for supporting the poor to avoid massive unemployment. “In that sense, we are in this together to build it and then we will have capitalism back flourishing for all," she added.