Global recovery still weak: IMF
dubai — Global recovery continues to be weak and fragile while prospects for advanced economies remain subdued despite some recent resilience as emerging and developing economies merit guarded optimism, the International Monetary Fund said.
IMF Managing Director Christine Lagarde said although a modest recovery is projected, the process faces considerable uncertainty as a result of divergent monetary policies, resurgence of financial volatility, low growth and investment depressing future demand and high inequality.
“Economic risks are exacerbated by social/political risk — terrorism, refugee surge, rising backlash against trade and globalisation,” Lagarde said in a speech delivered at Kellogg School of Management in the US.
Warning that restricting trade and limiting economic openness would certainly worsen the growth outlook for the world and especially its weakest citizens, the IMF chief called for a fundamental rethink on how growth can be made more inclusive, and act accordingly.
Lagarde warned that policy uncertainty, including in-trade poli-
If we were to turn our backs on trade now, we would be choking off a key driver of growth at a point when the global economy is still in need of every good piece of news it can get
IMF Managing Director
cy, can deter investment – a critical driver of growth. “We must reverse the trend towards protectionism and restore a climate that supports a rebound in trade — by completing multilateral trade agreements and pushing forward reforms in services and other areas of the ‘new economy’ such as regulatory cooperation and intellectual property rights.”
She said stronger, better growth is possible and will facilitate inclusion. “By using monetary, fiscal, and structural policies in concert — within countries, across them, and consistent over time — we can make the whole greater than the sum of the parts.”
“Talent wins games, but teamwork and intelligence wins championships. Winning the championship of growth and inclusive globalisation requires teamwork and collaboration across the world,” Lagarde said quoting Michael Jordan.
She said rising economic inequality is “a phenomenon in many countries today, rich and poor, but it has really hit home in the advanced world right now, where real incomes for many have been declining — or growing at a much slower rate — and past economic achievements seem at risk. What this tells us is that governments must work harder to make growth inclusive, so that all people can benefit from the positive trends that I just mentioned.”
According to Lagarde, the solution to making people better off is not to fall back on protectionism or other failed economic recipes of the past. “The task at hand is, first of all, to take the right macroeconomic policy decisions and maintain economic openness, a combination that has delivered so much good for the world in recent decades.”
She pointed out that since World War Two, trade has been the engine that has propelled economic progress. Trade was growing at twice the rate of global GDP until the 2008 crisis but has since fallen below that pace. “This is largely due to weak overall demand, but a non-trivial role is also played by the increase in protectionist trade measures over the past five years.”
“If we were to turn our backs on trade now, we would be choking off a key driver of growth at a point when the global economy is still in need of every good piece of news it can get. Restricting trade is a clear case of economic malpractice,” Lagarde said.
— issacjohn@khaleejtimes.com
annual expansion in India’s online market expected in next 4 years