IMF chief Christine Lagarde Thursday called on the policymakers to take benefit of the global broad-based economic recovery — the best in a decade — and take decisions with an aim to make the recovery “sustainable”.
“Our suggestion is that it is not time to be complacent; it is time to take those policy decisions that will actually enable more people and more countries to benefit from that recovery that should be made sustainable,” Lagarde told reporters at a news conference here at the start of the annual meeting of the IMF and the World Bank.
“And that is the question that we will put to the policymakers, to the finance ministers, and to the governors of the central banks who will be attending the meetings,” she said.
Noting that the recovery was stronger and much more broad-based than in the recent years, Lagarde said the International Monetary Fund (IMF) expects higher global growth this year (3.6 per cent) and in the next (3.7 percent).
“So in both the cases, 0.1 percentage points higher than our July projection and certainly much higher than the 3.2 growth that we had in 2016,” she said.
“What has not changed, though, is that the recovery is not complete,” Lagarde warned.
Last year, 47 countries experienced negative growth on a per capita basis, including many small and fragile economies.
“Far too many people across all types of economies are seeing their aspirations limited by the impact of technology and the repercussions of excessive income inequality,” the IMF boss said.
“The result is growing political tensions in many places and increased skepticism about the benefits of globalisation,” she said.
Proposing her policy agenda, Lagarde said the first priority should be to secure the recovery.
“This includes monetary policy that continues to support the recovery while also recognising risks created by easy finance conditions. And that is a subtle balancing act which will be determined by the situation of the country based on the independence of the banks and their mandate,” she said.
On the fiscal front, the IMF chief advised the countries to make investments in critical areas like infrastructure, education, and allowing women to access the labor market.
“Other countries should use this moment of better and stronger recovery to reduce public debt relative to GDP,” she said.
Lagarde said the structural reforms will vary from country to country and will be based on reform of the labor market, reform of access to the service markets, removing the rents that sometimes cripple those markets, removing barriers.
“Many of those challenges actually cut across borders,” she said, underscoring the need to make progress on a range of issues including fighting corruption, tackling climate change, and improving the global trading system.
“Fostering this kind of cooperation is the way that we can best serve our 189 member countries in order to help them build a more inclusive, more resilient global economy,” she said.