We have very high levels of debt around the world, about a hundred trillion dollars of debt globally, and an ever-increasing amount of debt unless there are big changes in policies. So the advice that the IMF gives on fiscal — and that is core to the work of the IMF — is going to be critical.
Gita Gopinath took a leave of absence from Harvard University back in 2018 to take on the role of IMF chief economist, and after having dealt with the pandemic and some of the most complex geopolitically induced economic crises ever, she was appointed first deputy managing director of the institution. Now she's returning to Harvard. What's she taking back with her?
I think I have a much better understanding of what are the main issues that countries grapple with. For example, I think there is a bit of a disconnect between the work that's done in academia on solving debt versus what exactly are the main issues that need solutions in the world.
Gita Gopinath is now the Gregory and Ania Coffey Professor of Economics at Harvard, and that's where she was when I asked her what it was like to go back to academia after all these years of being so hands-on in the economic policy space.
So I started January of 2019, and it has been a terrific experience. I mean, it's been really a great honor to work with so many countries to tackle unprecedented challenges like the pandemic, the war in Ukraine, and rising geoeconomic fragmentation. I believe my academic background was actually very helpful in coming up with solutions for these shocks that had never been seen in a long time. The work on monetary policy, fiscal policy, external balances, exchange rates — I mean, all of that benefited from the academic background I have. So my going back to academia, I see that as reinvesting in that stock of knowledge, and I'm also very excited to take back the experience that I've had at the IMF, which has been a tremendous learning experience, also to use that to think through what I will do in terms of future research and teaching.
Nice. So you played two very important but distinctly different roles during those years. How would you describe the difference between your work as a chief economist versus as a deputy managing director, and is there one role that you felt that you were perhaps better prepared for walking in?
I think both were very exciting roles, as I see it at least from an institutional perspective. As chief economist, I had more of an advisor's role, and as first deputy managing director and being part of Kristalina's management team, I was closer to being a decision maker on institutional matters. So I think that was an important difference. As chief economist, I was certainly closer to my academic background because I had to focus mainly on economic analysis, come up with the narrative for how we see the world economy evolving that comes out of the World Economic Outlook, and providing strategic guidance for research in the research department. As first deputy managing director, of course, I am part of the team that provides strategic guidance for the institution as a whole, which goes beyond research but includes programs, policies, capacity development — so many areas here. And in addition to thinking about economics, I also had to give attention to political considerations that come with being in management.
Right, and so as you said, there were many crises to deal with. But the pandemic led to something the world had never really dealt with before, known thanks to you as the Great Lockdown — a phrase that you came up with and that stuck. Have we ever managed to shake off the effects of the Great Lockdown, do you think, or has it had a lasting impact on the way the global economy is working these days?
So Bruce, if you look at broad economic indicators, I would say that things have gone better than we expected. So if you look at the extent of scarring from the pandemic, it has been very low to non-existent for advanced economies. In fact, in the case of the US, the economy has actually done better than pre-pandemic projections. Emerging markets also, while they had some slight scarring, it wasn't major. Low-income countries certainly were more harder hit, but I would say that the outcome, you know, five years after the pandemic — at least from the pandemic itself — has turned out to be better than was expected. Now that said, I think there are lasting features that have come out of the pandemic, and I would point to two. One is that the supply chain disruptions that happened during the pandemic has now triggered many countries to think about self-reliance, especially in critical sectors. And then the second is the inflation surge that happened during the pandemic in pretty much all countries has increased the cost of living for many, many people around the world, and that is a difficulty that remains to be addressed. I would say both these streams have impacted policymaking around the world and also politics and the world that we live in right now.
So I'm curious about your personal story — from a pretty modest upbringing in India to being named one of the most influential women in your field in such a short period of time. You obviously did lots of things right, but what are a couple of things maybe that you think helped get you to where you are today?
Well, thank you, Bruce. And if I may say so, I'd like to think of myself as being influential as an economist in this field, not just as a woman in this field. I think it's broader than just being an international women economist. In terms of what has helped, I would say one is that all through my life, be it in my younger days and later on, I always challenged myself and I kept raising the bar in terms of what I wanted to accomplish. So that put me in sometimes uncomfortable situations, but that's I think what has kept me going and brought me to where I am. And I think a lot of grit has been incredibly helpful and important too. And the second, I would say the most important factor is luck, which I categorize as including fantastic support from my parents growing up, but also my husband and son who have provided incredible support all through these years. When I was in DC working at the IMF, they were both in Boston, and not once did they complain about all the time that I was away from them. So I'm incredibly grateful to them for providing me with that emotional support. And more generally, I've had the privilege of working with exceptional colleagues at the IMF, including, you know, Christine Lagarde, who gave me the job as chief economist, and Kristalina, who gave me the job as first deputy managing director, but then also many, many, many other colleagues at the fund who were incredibly kind. And without them, I don't think I could have remotely done the job as I have done these past years.
And I remember speaking with you a few years ago, I guess probably in the midst of the pandemic, and I asked you if you thought it was a little overwhelming, and your answer was no. I mean, essentially what you said was you don't bring it on. You were ready for it.
Yes. I think that that's how I have tended to be most of my life.
