Economic slump worries as IMF, World Bank pledge action
World finance ministers pledged to boost growth today at IMF and World Bank Spring Meetings tainted by lingering worries about the dragging global economy and hints of discord.
Washington: World finance ministers pledged to boost growth today at IMF and World Bank Spring Meetings tainted by lingering worries about the dragging global economy and hints of discord.
Pounding home the message that each country needs to take action to ramp up growth, and following another week of relative calm in financial markets, the IMF leadership said they were "positive" about the outlook, even as they warned of high risks.
Yet with a rising number of developing countries approaching the two powerful institutions for support to deal with the plunge in commodity markets and tighter credit, there was no clear response to calls to organize an international backup plan if growth begins to stall again.
"The IMF is alert but not alarmed," said Agustin Carstens, chairman of the IMF's steering committee, as the meetings wound up in Washington.
Fund members had agreed on the need to quickly take "mutually reinforcing" actions to support global growth, he added.
The IMF began the week announcing it had slashed its outlook for global growth this year to a low 3.2 percent.
It warned that refugee flows, more volatility in financial markets, a surge in corporate defaults and "Brexit" -- Britain's threatened pullout from the European Union -- were all serious threats to the precarious global economy.
But after dozens of meetings with Fund members large and small, IMF Managing Director Christine Lagarde was more optimistic at the close.
She characterized the week as "a bit of collective therapy, to move from the negative situation that we are facing, and the challenges on the horizon, to a positive approach in order to identify the solutions."
"You don't make any progress unless you have a positive attitude," she quipped.
At the same time, she added, "Clearly the question is, how much is going to get done?"
The commitments of each country to the lender's "three-pronged approach" to firing up growth remained vague -- another sign of concern for experts.
The Fund has called for countries to act with monetary policy, fiscal spending and structural reform to boost economic activity.
But with a number of top central banks having already taken their interest rates negative and others at ultra-low level, many fear the further impact of monetary policy is limited.
And many countries lack the surplus financial resources to increase spending to spur growth.