IMF suggests policies to spur global growth
Underscoring that the world economy is expanding at an increasingly slow pace, thereby leaving the economic growth open to negative risks, International Monetary Fund (IMF) called on the countries to undertake growth-friendly fiscal policy stance and make contingency plans to materialise downside risks.
The IMF said the global economic growth has been too slow for too long; and although the current economic outlook looks less bright, there is a possibility of a better growth in the coming years, provided the countries strengthen their baseline outcome by taking growth-oriented initiatives.
The global lender in its press release said structural reforms in a good sequence complimented with an equally good fiscal support can only bring about a positive global output.
“Finally, further financial sector strengthening, as detailed in the Global Financial Stability Report, is essential to create a context in which monetary, fiscal, and structural policies can be more effective,” IMF said in its report.
However, the IMF cautioned that the policymakers should identify structural policy packages and a mutually beneficial fiscal to minimise future risks, and they should be ready for possible adverse outcomes.
“In addition, continuing international cooperation to improve both the functioning of the international monetary system and the stability of international finance are vital for global economic resilience. That work has progressed considerably since the global financial crisis, but there is more to be done,” it said.
Last week, the global financial body released its World Economic Outlook report, in which it anticipated a slight acceleration in the global growth, from 3.1% in 2015 to 3.2% in 2016, followed by 3.5% in 2017.
Global financial markets have been hit hard by fluctuating commodity prices, economic slowdown in the European Union and China witnessing its worst slowdown in decades. Other global factors, such as a stagnant demand in key markets, political disturbances in African countries, disturbances in Brazil, Britain’s threat to exit the EU, have further enhanced fears of economic uncertainties across the world.
Last week, global financial leaders representing the IMF and World Bank Group alongwith the Finance Minister from India, Arun Jaitely accompanied by the Reserve Bank of India Governor Raghuram Rajan met in Washington for the 2016 Spring Meetings. The meeting began on a sombre note with the IMF lowering its global growth forecast to 3.2% in 2016 from 3.4% that it had predicted in January this year.