IMF Panel Calls for ‘More Forceful’ Policies to Boost Growthby
Says `risks to the global economic outlook have increased'
Voting review to increase power of developing nations in IMF
Global finance ministers and central bankers pledged to step up their efforts to support growth, as chances rise of a broader slowdown and risks including refugee crises and a potential U.K. exit from the European Union threaten the world economy.
“Downside risks to the global economic outlook have increased since October, raising the possibility of a more generalized slowdown and a sudden pull-back of capital flows,” the International Monetary Fund’s top policy advisory committee said in a statement following a meeting on Saturday in Washington. To achieve strong global growth, “we will employ a more forceful and balanced policy mix,” the panel said.
The statement reflects policy makers’ concern that expansion will slow, after the IMF this week downgraded its global outlook again, warning that a prolonged period of slow growth has left the world economy at risk of slipping into stagnation.
Using all policy tools “is vital to stimulate actual and potential growth, enhance financial stability and avert deflation risks,” according to the communique from the panel, known as the International Monetary and Financial Committee. The panel advises the board of governors of the 189-member nation IMF.
The Washington-based Fund said earlier this week that the world economy will grow 3.2 percent this year, down from a projected 3.4 percent in January, as weak exports and slowing investment dim prospects in the U.S., a consumption-tax hike saps growth in Japan, and a slump in the price of everything from oil to wheat hobbles commodities producers.
After a separate gathering at the IMF’s spring meetings in Washington, Group of 20 finance ministers and central bankers said on Friday that risks to the global recovery have stabilized even as threats to the outlook remain, including terrorism and the U.K.’s potential exit from the European Union.
In nods to emerging markets, the IMFC said the fund will discuss the reporting of official reserves in Special Drawing Rights, the IMF reserve-currency unit of account that’s adding China’s yuan to its basket this year. In addition, the IMFC said the fund’s next review of voting shares should be completed by late 2017, and should increase the power of emerging market and developing countries.
The latest governance change was approved in December by U.S. lawmakers. It gave more of a voice to emerging markets such as China and India in exchange for greater congressional oversight of the fund.