Global growth facing weakest prospects in medium term in decades: IMF

“Interdependent challenges—high debt, fragmentation, and complexities in navigating the digital and green transitions—are holding back greater prosperity,” she told addressing the concluding ceremony of the third meeting of the G20 finance ministers and central bank governors in Rio de Janeiro.

“The global economy must avoid getting stuck in low gear, which would lead to a more unequal and more unstable world,” she said, calling on countries for a renewed effort to strengthen the foundation for robust growth and job creation: sound fiscal and monetary policies; a stable and inclusive financial system; progressive taxation; and boosting support for vulnerable countries.

New IMF analysis suggests that periods of stagnation lasting four years or more tend to push up income inequality within countries by almost 20 per cent, and that is a moral and ethical concern, she said.

“Central bankers must resist easing too early when price pressures remain persistent. They must also avoid waiting too long, and unnecessarily pouring cold water on economic activity. In this regard, preserving central bank independence is essential,” she was quoted as saying by an IMF release.

She proposed a three-pronged approach to mobilise a range of existing and new tools to help vulnerable countries meet their development needs.

First, countries need to implement reforms that reinvigorate growth and jobs, develop domestic financial markets to improve access to finance and mobilise fiscal revenue in an equitable and sustainable manner, she said.

Second, debt vulnerabilities in low-income countries (LIC) must be resolutely addressed. The median LIC is spending over twice as much on external debt service as a share of revenue than it did 10 years ago.

Third, the international community must step up and the IMF will do its part, she said adding that the gobal financial institution is reviewing its policy for charges and surcharges.

Fibre2Fashion News Desk (DS)