Tuesday, October 4, 2016

The IMF wants action policy in the multilateral world – Express

The world economy will grow in the medium term less than that recorded in the decade previous to the financial crisis, confirms the 'World Economic Outlook' (WEO), the main document predictions and recommendations of the International Monetary Fund (IMF), released this Tuesday.

the publication of The WEO, as well as of the Global Financial and Stability Report, and Fiscal Monitor on Wednesday, anticipate the annual assembly of the IMF and the World Bank between 7 and 9 October.

THE WEO predicts a global rate of growth of 3.7% between 2018 and 2021, below the annual average of 4,2% between 1998 and 2007, but slightly above the average of 3.2% recorded over the past eight years.

The international trade is expected to grow on average by 2.9% between 2008 and 2017, and 4.2% between 2018 and 2021, enough far from the annual average of 6.8% in the decade previous to the global crisis.

given this framework, the IMF recommends action. Given "the nature is still fragile and precarious state of the global recovery and of the threats it faces", the WEO underlines "the urgent need for a political approach to comprehensive, consistent and co-ordinated to invigorate the growth and makes it durable and ensure that it is distributed in a more uniform".

"The whole can be greater than the sum of its parts, if you use in concert with the policies monetary, fiscal and structural – within each country in a consistent way in time, and between countries," said Maurice Obstfeld, an economist-in-chief of the Fund and responsible for the WEO, in the presentation of the document on Tuesday.

Against the policies short-sighted

therefore, the Fund points out, this year, expressions such as "using all the levers of politics", referring to a three-pronged strategy articulated (monetary, fiscal, and structural reforms), "fostering global cooperation", "coordination intranacional and international" and "multilateral effort" particularly in relation to countries with room for manoeuvre and limited prospects of growth very weak.

"Many significant opportunities to boost employment and incomes around the world are being lost today because of political approaches to short-sighted," says the IMF.

In the press conference after the disclosure of the document that directed, the chief economist of the IMF, urged countries with room in the budget to invest in infrastructure projects of such a scale and to act multitalteralmente, with simultaneous actions on several fronts.

Responding to a question about the impact of a victory of the candidate Donald Trump in the elections of 8 November in the US, Obstfeld responded to with tweezers: "there Has been a lot of discussion in the elections [presidential] about to change, which can be dramatic, especially in long-standing position of the U.S. on trade policy. I think that this introduces an element of uncertainty in the combination [of policies]. As we all know, uncertainty is not good for investors and for employment. So, let’s see how this develops going forward. It is very difficult to know what really will happen after the election, taking into account the various checks and balances within the U.S. government".

The concern with the poor distribution of benefits of globalization arises, also, highlighted in the WEO this year. The perception of inequality, and its enlargement, has strengthened the growth of "political forces centrifugal" and the increased attraction by the rhetoric (visible in Europe and in the presidential elections in the United States) and even for protectionist measures against international trade and commerce, warns the IMF. Globalization is at risk.

Obstfeld said in the press conference that "in developed countries did not give great attention to those who have lost the international trade".

the Action of the central banks is not enough

The relationship between the monetary policy pursued by central banks, and fiscal policy and the economic position of governments has been a point of controversy.

THE IMF recalls what has been said: "The monetary policy alone will not be enough to eliminate the gaps of the product and to achieve a balanced and sustainable growth. Fiscal policy-friendly growth is, therefore, essential, calibrated in function of the available space in each country," said the document.

In the Euro Zone is particularly important to "supplement" the action of the European Central Bank (ECB), has called attention to the chief economist of the Fund. "If the ECB maintains its mandate to achieve the goal of about 2% inflation, this is very difficult to achieve without an inflation highest in some of the countries have output gaps that small or that do not have them. This will require more in terms of a boost to demand in those countries", he emphasised. The observation was made in answer to a question that I investigated if Germany and the Netherlands were the addressees of the recommendation of the IMF.

Obstfeld crescenta, still, the performance in the correction of the balance sheets of banks and companies, a use of more proactive policies macroprudênciais, and the implementation of structural reforms.


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