The IMF warns about weak global growth and urges the G20 to take actions

The IMF warns about weak global growth and urges the G20 to take actions

02/09/2016 source “Expansión”

The International Monetary Fund (IMF) released today a preliminary report to the G20 summit to be held in the Chinese city of Hangzhou next 4th and 5th September, which warns about the weakness of global economic growth and the “negative dynamics” forecasted for the long term.

The report states that the recent data “show a weak activity, a slower increase in trade and a very low inflation”, which points to an “even more modest global growth pace this year” regarding what was previously forecasted, and that the risks associated to this weak growth are a greater reduction of incentives to invest and a “slowdown in trade.” The document also warns of a series of “negative dynamics” that will occur in the long term as the aging of the population, the low productivity increase and a “growing anxiety about globalization.”

The Fund dropped in July a tenth in its global growth outlook for this year and for 2017, which stood at 3,1% and 3,4%, respectively, mainly due to the effects of the victory of the “yes” in the referendum on the exit the United Kingdom of the European Union (“Brexit”).

In a press conference, Helge Berger, the author of the report released today, declined to say whether these projections come down again in October, when the IMF concludes its annual meeting in Washington, but anticipated that some advanced economies like the United States economy will grow this year “less than expected” and that in the case of emerging economies, can be seen “mixed signals”.

The entity therefore calls on G20 countries to take actions. The report’s findings indicate that “it is urgent more progress” by the G20 members, especially because the group “is not meeting” the goal of raising the collective Gross Domestic Product (GDP) in 2% more for 2018.

Also, while the demand is “still insufficient”, the IMF recommends governments to adopt fiscal and monetary policies to “support the short-term growth” that, at the same time, “accelerate the positive impact of structural reforms”.

In an article published also today, the head manager of the IMF, Christine Lagarde, has warned about current threats “against economic openness” and emphasized that “without forceful policy actions, the world could suffer a disappointing growth for a long time.” “It’s easy to blame trade for all the problems that affect a country. But restraining free trade would stop an engine that generated unprecedented welfare incomes across the world for many decades” said Lagarde, that will attend the summit of G20.