00:00Well, Vicky Price is an international economist and she joins us now.
00:04Hello, Vicky. So much on the go.
00:05The IMF, like the WTO last week, warning global energy is the big unknown.
00:10How much can any economy, global or domestic, actually continue to grow amid so much insecurity?
00:19You're absolutely right. That is a serious problem.
00:21And, of course, we have insecurity in so many different areas.
00:24So there is the high energy cost.
00:26First of all, which is affecting some countries more than others.
00:28Even in the U.S., which is supposed to be self-sufficient, the problem they have is that prices have
00:33been going up.
00:34Petrol prices, which, of course, have all sorts of political ramifications.
00:38So it's one of the reasons why there have been attempts now to ease those increases in prices through all
00:45sorts of means, relieving sanctions from Russia and so on.
00:49But then you've got the very high inflation, which hasn't quite manifested itself so far,
00:55but it's forecast to be here with us for some time because quite a lot of those energy price increases
01:00are filtering through the economies.
01:03So this is the second issue which is affecting people's ability to spend and household incomes.
01:09But more important than that in relation to the price increases is the fact that interest rates are also on
01:15the rise.
01:16So in most countries, it's not only governments that are paying quite a lot in terms of servicing the debt,
01:21but individuals and businesses as well, which are being hitched right now because of that.
01:25Yeah. And, of course, that's going to increasingly hit the consumer.
01:29But this issue of high national debt levels is a big one.
01:33And the IMF is really concerned.
01:35And, of course, we know it's behind, it's one of the reasons behind the big global bond sell-off we've
01:39seen recently.
01:40How can national debt be reduced without severe budget cuts that are going to make the ordinary person very unhappy?
01:49But with great difficulty, of course, one of the ways in which you normally have an impact on your debt
01:56situation
01:57is A, through maybe inflation, sort of taking it out of the equation because your debt then becomes a little
02:05bit less in real terms.
02:07But that almost assumes that you will have some growth in the economy as well.
02:11And the faster the growth is, the easier it is to absorb, if you like, that increase in your borrowing,
02:17which is inevitable.
02:18It is happening.
02:19There is no way that countries are able to contain their budgets in any serious way.
02:23Look what's going on in Europe.
02:25Look at what's happening in France, for example.
02:27But also, of course, in the U.S. where more defense spending and in the U.K. too are all
02:33putting pressure on budgets.
02:34So it's difficult.
02:35The only way you do it is through growth.
02:37And you didn't mention one of the areas that the IMF is pointing at, which is investment, you know,
02:42high growth through investment across the world.
02:44Well, particularly in AI.
02:47So far, this is mainly happening in the U.S.
02:49And one of the reasons why, as the head of the IMF has said, in terms of growth still remaining
02:56around 3%,
02:57despite the fact that oil prices are much higher than had been anticipated,
03:01is partly because the U.S. is doing quite well.
03:04Certainly, in terms of the developed world, they are benefiting most from the increase in investment in AI.
03:11It hasn't quite happened in loads of other places yet.
03:14And, of course, if it were to, despite the uncertainty surrounding it, of course, maybe it's a bit of a
03:19bubble,
03:19but there is no doubt that AI can lead to quite substantial productivity improvements.
03:23And if it can be spread across the developed world in particular, and Asia more generally,
03:28then that would make quite a big difference to growth.
03:31Yes, let's hope so.
03:32Vicky Price, thank you so much for speaking to us.
03:34Vicky, of course, is an international economist.
