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Transcript: Gita Gopinath on "Face the Nation," October 24, 2021

The following is a transcript of an interview with Gita Gopinath, Chief Economist of the International Monetary Fund, that aired Sunday, October 24 2021, on "Face the Nation."


MARGARET BRENNAN: We turn now to the COVID impact on the global economy, we're joined by Gita Gopinath, Chief Economist at the International Monetary Fund and the first woman to hold that role. Gita, good morning to you. 

IMF CHIEF ECONOMIST GITA GOPINATH: Hi, MARGARET. 

MARGARET BRENNAN: Let's start with a-- 

GOPINATH: --pleasure to join you. 

MARGARET BRENNAN: --I'm so glad you did. Let's start with the largest economy in the world, the United States. The IMF had said previously that any change in the size of this spending deal President Biden was putting together could have an impact on global growth. It's been shaved down from that original $4 trillion number. What will the impact be?

GOPINATH: MARGARET, to answer that question, we will need to know what the ultimate package looks like because the original package, which was slightly over four trillion, the combined package of the infrastructure bill and then the human infrastructure bill, the two of them were about slightly over $4 trillion, but that had spending measures and it had revenue raising measures, including taxes. And now the question is what happens in this new package? Because if you're going to cut back spending and then you also then scale back tax increases, then the effect could be somewhat similar in terms of the net effect. But again, we won't know until we actually know the full details of the package.

MARGARET BRENNAN: Well, we know at least that paid leave provisions are being trimmed from 12 weeks down to four. I know you have been looking at the impact specifically on women who are the caregivers here and are so central to the recovery. What does that do?

GOPINATH: We've been in support of the paid parental leave, and we think 12 weeks is a reasonable time horizon and we'll wish to provide that kind of leave that would be consistent with the standards in other OECD countries. It's what the federal government currently has. And in this crisis, what we have seen is both what they call a she-cession and a mom-cession, which is the fact that we've had women being much harder hit in many parts of the world because they work in sectors- the contact intensive sectors that have been harder hit, but also because they end up being the main caregivers at home are the poor children of parents. And so therefore having this kind of paid family leave will help bring back women much more quicker into the workforce.

MARGARET BRENNAN: I want to pick up on that again on the other side of this commercial break, so please stay with us. 

(COMMERCIAL BREAK)

MARGARET BRENNAN: Welcome back to FACE THE NATION, we want to continue our conversation with Gita Gopinath, chief economist at the International Monetary Fund. Before the break, you were talking about the rest of the world. The most developed economies in the world have 12 weeks of paid leave. The United States does not, and in fact, President Biden won't be able to deliver on that. His compromise has been four weeks of paid leave in the latest version of this spending bill. Is it safe to say that will have a negative impact on economic growth and your projections?

GOPINATH: MARGARET, we need to bring back all the women who have left the labor force and return back to the market to get a full recovery and family paid leave absolutely helps in that dimension. Now, four weeks is better than zero, so I think that that is certainly progress made. But again, what we are seeing around the world is we are seeing labor markets that are recovering much more slowly than output and in the US, while we are seeing men come back much faster. Women are taking longer for that to happen. So we need to pay very close attention to making sure that women- its attractive for women to return to the workforce.

MARGARET BRENNAN: And they're capable of it. So, the other thing I want to ask you about that's a big worry right now is just the cost of living. We're seeing prices go up. Procter & Gamble announced this week toothpaste, basic goods- they're going to have to raise prices there. The Federal Reserve chair in this country, Jerome Powell, said risks are to longer bottlenecks, higher inflation. How long can this go on before we lose control?

GOPINATH: Inflation has indeed come up high in these last several months. Now some of that was expected after a deep recession last year. We've had a rebound in global demand. We've seen commodity prices come back up after crashing last year. But we're also now seeing the frictions between supply and demand not matching up. We're seeing supply chain disruptions around the world because the fact is that the grip of the pandemic remains, even though it may be somewhat lighter. It is- it remains in the world and that's creating disruptions everywhere. The way we see it is that these pressures will remain until sometime in the middle of next year. And then we should see- see us returning to more normal levels of inflation towards the end of next year. But this is going to take some time and we are certainly seeing costs go up. Energy prices have risen again sharply at this time of the year, and that's going to feed into headline inflation.

MARGARET BRENNAN: There's also a potential debt crisis looming over the second largest economy in the world. A senior administration official here in the U.S. told me it could be catastrophic- it could just be painful- if one of the largest property developers there in China fails. How do you see this playing out?

GOPINATH: The property sector is a very important part of China's economy, and Evergrande is one of the biggest property developers, which is why we're paying very close attention. But at the same time, our view is that the government has the resources and the ability to ring fence the problem, which means that while we will see a shake up happening in the real estate sector, that it will be contained and will not spill over more broadly to the China- to China's economy. And therefore we won't see very substantial slowing in growth, which is when we will see repercussions to the rest of the world. So it is a risk, is the downside risk that we're paying very close attention to, but we as of now, we believe that the effects can be contained.

MARGARET BRENNAN: It's a controlled risk at this moment.

GOPINATH: That's right.

MARGARET BRENNAN: Alright. Gita Gopinath, thank you so much for joining us today. We'll be right back.

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