WEBVTT - Kristalina Georgieva Talks Argentina, Global Inflation

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio News.

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<v Speaker 2>Thank you so much, Matt. I am here with Kristalline Kerkava,

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<v Speaker 2>the Managing director of the International Monetary Fund, at the

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<v Speaker 2>time when the world leaders are all coming together. We

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<v Speaker 2>spoke back and sprang and you seemed just a little

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<v Speaker 2>bit more concerned.

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<v Speaker 1>So did everybody here.

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<v Speaker 2>There seems to be more optimistic tone.

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<v Speaker 1>Why is that?

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<v Speaker 3>Because since the Spring meetings, we have seen the world

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<v Speaker 3>economy being quite resilient and very important. We have seen

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<v Speaker 3>countries I think responsibly towards their own interest and the

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<v Speaker 3>interests of the world. Let me unpack this one. We

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<v Speaker 3>have upgraded our growth projections since April. Why because performance

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<v Speaker 3>across the world is quite strong. Why is it strong

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<v Speaker 3>because the tariff shock from the United States is.

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<v Speaker 1>Not as dramatic as we feared in April.

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<v Speaker 3>In April, if you recall, the announced startifs were twenty

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<v Speaker 3>three percent. Today US studies nominally seventeen and a half percent,

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<v Speaker 3>but what is being collected is somewhere around nine percent,

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<v Speaker 3>So smaller shock from the US.

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<v Speaker 1>Two.

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<v Speaker 3>What did the rest of the world do, with the

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<v Speaker 3>exception of China and initially Canada that retaliated against the

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<v Speaker 3>United States. The rest of the world said, not it.

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<v Speaker 3>For that, we are not going to engage in retaliatory action.

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<v Speaker 3>So we have one hundred and ninety one members, one

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<v Speaker 3>hundred and eighty eight of them decided to trade by

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<v Speaker 3>the rules that exist.

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<v Speaker 1>And the very interesting thing is you.

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<v Speaker 3>Now see the value of strong fundamentals. Countries have built

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<v Speaker 3>good institutions, they have built good policies, especially in the

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<v Speaker 3>emergent world. Now we are seeing the pay back from

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<v Speaker 3>that investment.

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<v Speaker 2>So is just a reason why you think that it's

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<v Speaker 2>legitimate for the market to be looking through some of

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<v Speaker 2>the reason flare up in tensions between the US and

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<v Speaker 2>China because ultimately trade keeps going and the world has

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<v Speaker 2>sort of shown that it isn't really willing to escalate.

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<v Speaker 1>To that degree.

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<v Speaker 3>That is exactly the reason why everybody's calm even if

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<v Speaker 3>China US tensions go up and down, because there is

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<v Speaker 3>no spillover.

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<v Speaker 1>But let me say this, we shouldn't be complacent.

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<v Speaker 3>What we see is that Chinese goods that used to

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<v Speaker 3>come to the United States are now redirected to Asia

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<v Speaker 3>and to European Union.

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<v Speaker 1>If this, recipients of Chinese.

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<v Speaker 3>Goods feel the heat and decide that they too shoot

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<v Speaker 3>impulse studies. We may still have the risk of a

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<v Speaker 3>trade war moving from one place to another.

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<v Speaker 1>So our message to everybody is.

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<v Speaker 3>Be calm and to China, be careful, do not provoke

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<v Speaker 3>other countries to see you as a threat to the economies.

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<v Speaker 2>We talk about emerging markets and the resilience, so we've

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<v Speaker 2>seen there, you talk about the potential lack of resilience

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<v Speaker 2>in the developed world because of the fiscal overhanger. You

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<v Speaker 2>started to seem like dynamics in the developed world.

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<v Speaker 3>When we look at the prospects for the world economy,

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<v Speaker 3>they're underwhelming. Growth is slow, death is high, and who

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<v Speaker 3>leads on the death front advance economies. They have borrowed

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<v Speaker 3>to meet the needs of people in covid when we

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<v Speaker 3>had the shock from a Russia's war in Ukraine. Now

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<v Speaker 3>they need to pull back what they're providing a support

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<v Speaker 3>and it is very difficult. People like receiving they don't

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<v Speaker 3>like losing what they have got. So we see everybody

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<v Speaker 3>recognizing that that needs to go down, that fiscal consolidation

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<v Speaker 3>needs to take place. Here in the United States, Secretary

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<v Speaker 3>invest And says we need to get to three percent

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<v Speaker 3>deficit but acting on these intentions is hard. Where I

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<v Speaker 3>want to shout bravo to Italy. Traditionally Italy was.

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<v Speaker 1>A country that was seen.

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<v Speaker 3>As having real difficulty to tighten up. Now they are

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<v Speaker 3>very likely to go below three percent deficit next year.

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<v Speaker 1>So there are some bright spots.

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<v Speaker 3>Greece is a fantastics There are some bright spots, but

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<v Speaker 3>still bright spots on a dark horizon.

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<v Speaker 2>And they had to get to a pretty dark place

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<v Speaker 2>before they got to that bright spot. And I do wonder,

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<v Speaker 2>I mean, how much it's swimming into a void.

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<v Speaker 1>You know, reduce your debt, and.

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<v Speaker 2>Everybody wants to keep getting their benefits. But I do

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<v Speaker 2>wonder whether you see the ramifications of this in the

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<v Speaker 2>price of gold. In this conversation that we have here

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<v Speaker 2>about the basement of the dollar, do you think that

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<v Speaker 2>those threats are real?

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<v Speaker 3>The price of gold is going up because uncertainty has

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<v Speaker 3>shot up, and it is staying very high. What do

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<v Speaker 3>you do at the time of uncertainty. You try to

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<v Speaker 3>anchor yourself in something that has proven value. When we

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<v Speaker 3>look at the dollar over decades, the share of door

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<v Speaker 3>in reserves globally has gone down somewhat, mostly because other

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<v Speaker 3>countries have presented a good alternative, but they're all medium

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<v Speaker 3>sized countries. For Australia, Sweden, Switzerland, even Eurozone is not

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<v Speaker 3>that big to present an alternative to the door. And

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<v Speaker 3>we need to remember people go for the door because

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<v Speaker 3>of the depth of the capital markets in the United States,

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<v Speaker 3>the liquidity, the size of the economy, the productivity of

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<v Speaker 3>the American worker which is unmatched in other advanced economies.

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<v Speaker 3>So yes, it is likely with the as the world

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<v Speaker 3>becomes multipolar, it is likely to see this strength, but

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<v Speaker 3>it is a slow, slow, slow process.

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<v Speaker 2>I also want to ask you about Argentina and the

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<v Speaker 2>US recently have this twenty billion.

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<v Speaker 1>Dollars swap line.

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<v Speaker 2>How I say IMF involved in that effort if at all.

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<v Speaker 3>We work hand in hand with the Argentine authorities and

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<v Speaker 3>with the partners of Argentina, first and foremost US Treasury

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<v Speaker 3>because of the size of this support, but also the

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<v Speaker 3>World Bank, the Inter American Development Bank, And we do

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<v Speaker 3>it because we see a genuine change for the better

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<v Speaker 3>in Argentina.

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<v Speaker 1>Over the last two years.

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<v Speaker 3>What have we seen from negative growth to four and

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<v Speaker 3>a half percent this year and this is slower than

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<v Speaker 3>last year. Inflation from triple digits down to twenty eight percent,

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<v Speaker 3>deficit gone instead of it. That is surplus, very important,

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<v Speaker 3>poverty trending down, and that means that there is something

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<v Speaker 3>happening in Argentina.

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<v Speaker 1>That is good for the future of Argentina.

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<v Speaker 2>If Halvier Melai does not win the election, do you

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<v Speaker 2>still have that optimism.

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<v Speaker 3>Well, he will be there. He will be the president

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<v Speaker 3>for some time to come. And I think that there

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<v Speaker 3>is a still fairly strong support art in Argentina forgetting

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<v Speaker 3>the country to be a normal economy in which regulations

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<v Speaker 3>are meaningful and for purpose. There is a very big

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<v Speaker 3>regulatory house cleaning that is taking place in Argentina. So

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<v Speaker 3>I expect that even if we are in a somewhat

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<v Speaker 3>different place, and frankly, we don't deal with politics. It

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<v Speaker 3>is for the people of Argentina to decide. But when

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<v Speaker 3>you look at the strength of the economic position of Argentina,

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<v Speaker 3>it's good to sustain the country going on that path.

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<v Speaker 2>Kristlinik Yorgeva, thank you so much for taking the time.

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<v Speaker 2>Always a pleasure to speak with you. That was Krystallinic Yrkeeva,

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<v Speaker 2>the Managing director of the International Monetary Fund here in Washington, DC,