Industrial policies have become increasingly utilized by countries aiming to reshape their economies, reports the International Monetary Fund (IMF) in its latest analysis. The Fund identifies the potential pitfalls of such policies, warning that without accompanying structural reforms, these initiatives can inflate consumer prices and misallocate resources.
The IMF chapter, focusing on regions like the European Union, China, Brazil, and South Korea, emphasizes that subsidies should be strategically crafted. It notes that, while subsidies can bolster targeted sectors, they must align with clear goals and be integrated with broader economic reforms to prevent adverse effects.
Highlighting global trends, the report observes a growing reliance on industrial policies amid geopolitical tensions and supply chain concerns. However, the IMF stresses the importance of precisely evaluating and recalibrating such initiatives to enhance the business environment and foster sustainable growth.