Ref. :  000036645
Date :  2014-04-02
Language :  English
Home Page / The whole website
fr / es / de / po / en

Global Economy Turning Corner of Great Recession, But Obstacles Ahead

Author :  FMI / IMF

The global economy is turning the corner of the Great Recession, although overall growth remains too slow and weak, IMF Managing Director Christine Lagarde said.

In a speech at the School of Advanced International Studies (SAIS) in Washington ahead of the 2014 IMF-World Bank Spring Meetings, Lagarde added that “a modest and fragile recovery is under way that now needs to change gears toward more rapid and sustainable growth.”

Lagarde pointed to a few broad trends in the global economy, noting that economic activity in the advanced economies, such as United States, euro area, and Japan, is picking up, but at varying speeds.

Growth rates in emerging market countries, while slowing, are among the highest in the world, she said, especially in emerging Asia—a continuing “bright spot” in the global economy. Likewise, growth in sub-Saharan Africa continues at a strong pace. Conditions are more challenging in the Arab countries in transition, Lagarde reported, where growth remains held back by a difficult social and political situation.

Short-term roadblocks

Lagarde cautioned that there are short-term roadblocks on the path to stronger and more durable growth. Old obstacles include finishing the financial sector reform agenda; continuing high debt levels in many countries; and stubbornly high unemployment.

New roadblocks include

• The emerging risk of “low-flation”—a potentially prolonged period of low inflation that can suppress demand and output—and suppress growth and jobs.
• Risk of heightened market volatility associated with the tapering of quantitative easing in the advanced economies, and with a generally less benign external financial climate.
Geopolitical tensions could cloud the global economic outlook. The situation in Ukraine is one which, if not appropriately managed, could have broader spillover implications.

Lagarde said the costs of continued sluggish growth are high: modest income gains and gradual reductions in unemployment. “The risk is that without sufficient policy ambition, the world could fall into a medium-term low growth trap.”

Cruising speed for growth

The objective is to reach cruising speed for medium-term growth, Lagarde declared. With space for supportive macroeconomic policy narrowing in many countries, the role of structural reforms as a policy lever will increase. Areas of emphasis include:

• Higher, well-prioritized investment to increase potential output and to create jobs.
• Inclusive labor market reforms that can go a long way in boosting potential growth.
• Reforms to product and services sectors that can break down vested interests, boost competition, and unleash huge growth and employment potential.

Strengthening international cooperation

“At a time when the world is still recovering from the Great Recession—and at a time when geopolitical tensions are increasing—how can we strengthen the international cooperation that is essential to address these challenges?” Lagarde asked.

Lagarde noted that the major countries of the Group of Twenty leading industrial and emerging market economies had recognized, at their meeting in Australia in February, that —with the right policy actions by countries and the right cooperation across countries—more than 2 percent could be added to global growth over the next five years.

“This would place the global economy on a substantially different trajectory from today,” she said.

Rate this content
Average of 90 ratings 
Rating 2.46 / 4 MoyenMoyenMoyenMoyen
Same author:
 flecheIMF Sees Subdued Global Growth, Warns Economic Stagnation Could Fuel Protectionist Calls
 flecheWorld Economic Outlook October 2016
 flecheGlobal Financial Stability: Vulnerabilities, Legacies, and Policy Challenges
 flecheMiddle East Outlook Sees Modest Improvement, But Risks Remain
 flecheLower Potential Growth: A New Reality
 flecheFinancial Services Access Vital to Central Africa Growth
 flecheIMF Agenda Focuses on Achieving More Dynamic, Job-Rich Global Economy
 flecheJobs, Growth, Fairness Top List of Priorities for Arab Countries
 flecheWorld Economic Outlook Reports
 flecheThe Trillion Dollar Question: Who Owns Emerging Market Government Debt
 flecheDespite new risks, global recovery seen gaining strength
 flecheG-20 ministers agree ‘historic’ reforms in IMF governance
 flecheIMF enhances crisis prevention toolkit
 flecheAfrica’s economic transformation—the road ahead
 flecheLe secteur privé gagne du terrain en Afrique
 flecheThe IMF response to the global crisis: meeting the needs of low-income countries
 flecheWorld Economic Outlook (April 2009) - press point for chapter 3 "From recession to recovery: how soon and how strong?"
 flecheIMF calls for urgent action as third wave of global crisis hits poorest countries
 flecheGlobal Financial Stability - Report Market Update
 flecheWorld Economic Outlook - October 2008 (Full report)
 flecheThe Rise of Africa's "Frontier" Markets
 flecheLe FMI précise comment il surveillera les politiques économiques
 flecheGlobal financial stability report
 flecheIMF Shifts Focus to Key Global Economic and Financial Concerns
 flecheIMF Board of Governors adopts Quota and Voice reforms by large margin
 flecheInternational Working Group of Sovereign Wealth Funds is established to facilitate work on voluntary principles
 flecheGlobal Financial Stability Report (Executive summary)
 flecheGlobal governance: new players, new rules
 flecheIMF Managing Director highlights progress on IMF reform agenda and warns IMF Board of Governors of slower global growth
 flecheStrauss-Kahn to press ahead on IMF reform
 flecheThe rise of sovereign wealth funds
 flecheUrban poverty
 flecheThe urban revolution
 flecheGlobal Growth Seen at 5.2 pct in 2007
 flecheWorld Economic Outlook - 2007
 flecheRenewing the IMF's Commitment to Low-Income Countries
 flecheGlobalization and Inflation - World Economic Outlook
 flecheIMF to Extend 100 Percent Debt Relief for 19 Countries Under the Multilateral Debt Relief Initiative
 flecheNew Report Calls For Urgent Action To Cut Global Poverty and Win Better Development Results For Poor Countries
 flecheRato y Figaredo, Rodrigo de
 flecheExpanding trade and unleashing growth: The prospects for lasting poverty reduction
 flecheCan the East Asian Miracle Persist?
 flecheEmerging Asia: Outlook, Challenges, and India's Growing Role
 flecheWorld Economic Outlook
 flecheCommuniqué of the Ministers and Governors of the Group of Ten
 fleche"Why Globalization Works" Economic forums and international seminars
 flecheWorking paper : External Debt Sustainability in HIPC Completion Point Countries
 flecheChina's rapid economic growth and integration into the global economy
 flecheInternational Monetary Fund
 flecheIMF Members' Quotas and Voting Power, and IMF Board of Governors
 flecheIMF Executive Board Discusses Euro Area Policies
 flecheToward a Stronger Europe in the Global Economy
 flecheThe IMF Stands Ready to Help Iraq
Keywords   go
Translate this page Traduire par Google Translate

Share on Facebook
Partager sur Twitter
Share on Google+Google + Share on LinkedInLinkedIn
Partager sur MessengerMessenger Partager sur BloggerBlogger