Friday, 17 October 2014

2014 Annual International Monetary Fund (IMF) - World Bank Meetings

By CGR Research Associate Sana Hussain 

I recently attended the 2014 Annual International Monetary Fund (IMF)-World Bank Meetings in Washington D.C. The meetings this year were special, and not just because they coincided with the 70th birthday of the IMF. While the usual concerns pertaining to the world economic outlook (modest economic growth; uneven and fragile recovery; downside risks; unemployment and jobs; sovereign debt restructuring; structural reforms) were discussed, a number of new themes in the global economy were also brought to the forefront of debate. Firstly, it was recognized that increased investment in infrastructure has the potential to meet both, the needs of investors who are seeking financing opportunities with strong, reliable returns and the needs of countries that are seeking investments which will support dynamic growth. Secondly, the unconventional IMF response to the Ebola crisis, i.e. allowing the countries affected to increase their fiscal deficit, demonstrated that it is in a position to revisit traditional structures in order to better address the challenges faced. Thirdly, the importance of boosting participation of women in the labour force was highlighted. Fourthly, the IMF introduced the concept of ‘spillbacks’ to describe economic feedback loops, specifically pointing out that emerging markets are now large enough that if their growth slows because of the Fed’s policies, it could impair U.S. economic expansion too. Lastly, the managing director Christine Lagarde referred to the risk of a new mediocre, where growth is low, and uneven, but also believed this would lead to a new momentum, which was to be the topic of further discussion amongst the members. Conclusively, the meetings provided insight into where the global economy is heading and how to deal with growing challenges.   

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