IMF Calls For More Economic Growth To Eliminate Risks | Independent Newspapers Limited
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IMF Calls For More Economic Growth To Eliminate Risks

Posted: Apr 5, 2016 at 3:55 pm   /   by   /   comments (0)


Christine Lagarde, managing director of the International Monetary Fund (IMF), has restated that stronger action by world’s economies is needed to boost growth, warning that downside risks were increasing without decisive action.

She stated this in a speech at Frankfurt’s Goethe University, on Tuesday, prescribing specific moves in that direction, including for the United States to raise its minimum wage.

She urged Europe to improve job training and for emerging economies to cut fuel subsidies and boost social spending.

She said that recovery from the 2007-2009 global financial crisis “remains too slow, too fragile and risks to its durability are increasing”.

“Let me be clear, we are on alert, not alarm. There has been a loss of growth momentum,” Lagarde said.

She added, however, that “if policymakers can confront the challenges and act together, the positive effects on global confidence, and the global economy will be substantial”.

Her remarks come less than two weeks ahead of the Fund’s 188-member countries will gather in Washington for the IMF and World Bank Spring Meetings to assess the health of the world economy.

While the U.S. recovery has been gaining momentum and some emerging markets such as Mexico have performed well, the IMF has warned that growth in Europe and Japan has been a major disappointment.

IMF said China’s slowing growth has hurt oil and commodity exporting countries, including Brazil and Russia.

To counteract those headwinds, Lagarde called for accelerating structural economic reforms, increased fiscal support and continued accommodative monetary policy.

For the first time, she prescribed some specific policy actions in these areas.

“A higher minimum wage, expanded tax credits for the working poor and improved family leave benefits – changes championed by President Barack Obama and Democratic Party presidential candidates – could help increase the U.S. labour force,” she said.

Republican lawmakers who control the U.S. Congress, however, have blocked these proposals from advancing.

Lagarde said Euro area countries should implement better training and employment-matching policies to help reduce unemployment for young people.