Global finance chiefs prepared to 'act promptly' to spur growth

  • Global finance chiefs prepared to 'act promptly' to spur growth

Global finance chiefs prepared to 'act promptly' to spur growth

The IMFC meeting is part of the ongoing Spring Meetings 2019, which is co-hosted by the IMF and the World Bank in Washington.

The sober mood among finance leaders at the meetings this week was a stark contrast to the optimism that characterized the gathering one year ago when officials were heralding a rare period of robust and synchronized growth. The IMF cut its forecast for global growth from 3.6 per cent last year to 3.3 per cent in 2019, the slowest since the recession year 2009, but it predicts growth will return to 3.6 per cent in 2020.

In Japan, the economy is projected to expand by 1 percent in 2019, and the International Monetary Fund expects a gradual slowdown in growth to 0.5 percent next year. That has eased the pressures that global financial markets felt at the end of 2018, which contributed to the unwanted tightening of financial conditions partly blamed for the economic weakening.

"It is critically important that we work tirelessly to foster broad-based growth, raise median incomes, create jobs and fully incorporate women and young people in economies", Malpass said in a statement. This will require, in particular: "(i) pursuing growth-friendly fiscal consolidations, where needed, that strike the right balance between development spending, reducing debt vulnerabilities, and meeting essential social needs; (ii) strengthening the effectiveness of monetary policy to enhance the monetary transmission mechanism; (iii) enhancing the flexibility of markets to facilitate adjustment to shocks and preserve competitiveness; (iv) removing trade barriers to boost medium-term growth, including in the context of the African Continental Free Trade Agreement; and (v) addressing illicit financing flows and base erosion to enhance governance and strengthen revenue collection".

There is some cause for optimism.

The policy panel urged central banks to communicate their policy decisions well and act in a "data dependent" way, according to the text, which also reiterated the commitment of nations to refrain from "competitive devaluations" of their currencies.

But he also warned that factors that undermine confidence, including the risk of a hard Brexit and a global trade war, continue to "loom large", putting growth at risk.

Elevated trade tensions have been a central talking point at the International Monetary Fund and World Bank meetings this week and have been widely cited as a primary driver behind the weakening of the global economy. Chen also admitted that trade tensions with the United States are making China's economic outlook more uncertain and urged "prudent" policymaking. They're fighting US allegations that China deploys predatory tactics - such as cybertheft and forcing foreign companies to hand over trade secrets - in a sharp-elbowed effort to challenge American scientific dominance.

In remarks to the World Bank's steering committee on Saturday, Mnuchin said the US was encouraged that the bank's private sector lending operation wanted to step up support for nations "affected by fragility, conflict and violence".

Japan, which will kick off its own negotiations with the Trump administration in Washington on Monday aimed at averting automotive tariffs, also bemoaned the current state of trade.

"Uncertainties from trade frictions, the negative impact of tariff increases on trade, and the disruptions of global supply chains have gradually emerged", Chen said.