Global Economic Leaders Point to Mounting Risks

The finance ministers and central bankers from almost 190 countries who gathered in Bali for the annual meetings of the International Monetary Fund and World Bank drove, I suspect, the final nail into the coffin of the notion of a synchronized pickup in global growth. In a tone that contrasted with the optimism of their spring meetings in April, members of the International Monetary and Financial Committee, or IMFC, listed many fragilities, and cited a set of risks that “are increasingly skewed to the downside.”

Even though the IMFC contains members with opposing views on free trade and responsible economic and currency management, it managed to arrive at compromise language for its common communique at the conclusion of the meetings over the weekend. But the committee failed to go beyond boilerplate phrases when it came to policies, including an agreement on meaningful and coordinated measures to deal with the increasing divergence among advanced economies, as well as steps to ensure that the eventual convergence translates into higher global growth and durable financial stability, as opposed to meaningful risks of recession and unsettling financial volatility.