Mozambique: Complaints about the TSU must be sent to the Framework Commission - deputy minister
On Monday the IMF launched their World Economic Outlook Update at Davos for the first time, and IMF MD Christine Lagarde seems optimistic in terms of the IMF’s assessment of the global economy. These are her comments on global economic growth.
CHRISTINE LAGARDE: This is actually the first time that the International Monetary Fund presents its mid-term outlook on the occasion of the World Economic Forum, just to give you the landscape as we see it at the moment.
Global growth has been accelerating since 2016 and all signs point to a continuous strengthening of that growth this year in 2018 and next year in 2019. So this is very welcome news. And being here, and having arrived in the middle of the snow we might all think of the words by William Blake in the winter: Enjoy! But we believe that this would be a mistake, and that complacency is actually one of the risks that we should guard against.
We certainly should feel encouraged by the strengthened growth, but we should not feel satisfied. Now, why is that? First of all, there are still too many people who are left out of that recovery and acceleration of growth. In fact, about one-fifth of emerging and developing countries saw their per capital income decline in 2017.
The second reason why we should not feel entirely satisfied is that this is mostly a cyclical recovery. And absent continuous reforms, the fundamental forces that had us so much worried about this new mediocre that we feared – in other words, the scars from the crisis, the low productivity, the ageing population and on and on, and future potential growth – all of that will continue to weigh on medium-term prospects.
The third reason why we should not be entirely satisfied – there is uncertainty in the year ahead. The long period of low interest rates has led to a build-up of potentially serious financial sector vulnerabilities. We are seeing a troubling increase in debt across many countries, and we need to remain watchful.
Now you will say this is the responsibility of the IMF, to constantly see the potential downside risks, even down the road if not in the immediate short term. And yes, it is our responsibility. It doesn’t change the fact that we are quite upbeat for the immediate future, but what we are seeing in the more medium term gives us ground for worry.
I did say at the October annual meeting that, quoting John Fitzgerald Kennedy, that it’s when the sun is shining that you want to repair the roof. I will not venture there today, but it’s clearly when the snow stops here that they clear the roads, and the same analogy works. It’s a perfect opportunity actually now for the world leaders to repair their roof. And the theme of this year’s annual meeting of the World Economic Forum – Creating a Shared Future in a Fractured World – clearly demonstrates that.
Let me outline three areas where I believe that this sharing has a meaning. First of all, shared growth. We think that policymakers should use these very circumstances to make the difficult structural and fiscal reforms that might not happen otherwise, or that were too difficult in times of hardship. And that means taking steps to boost long-term growth, paying down debt in places where it is too high, and in other places investing back into the economy through infrastructure and effective social spending.
Now, why is it shared, you will say. Because sharing begins by mending your own turf.
Second, shared opportunity. We will hear plenty about that in the course of this week. Growth in our view needs to be more inclusive – not only across countries, which has occurred over the course of the last few decades – but within countries. And some areas of focus in our view require training for workers that are displaced or at risk of being displaced by new technologies and globalisation. We need those new opportunities for workers at risk, we need new opportunities for young people and we need new opportunities for women as well, and them being included safely in the workplace.
Finally, sharing is about global responsibilities. We need robust international cooperation if we are going to tackle shared problems. And that includes fighting corruption, improving the international trading systems, tackling tax evasion, addressing climate-change issues and on and on.
So while we should certainly appreciate this season and the good news that we have, we should also certainly focus on the measures that are needed today for long-lasting solutions in order to have that better shared future.
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