[This corrects the October 2001 WEO projections for Selected Asian Emerging Market Economies in the table. None of the numbers showing the latest projections has been changed.]
IMF Managing Director Horst Köhler made the following statement on the global economic situation at a press conference in Washington, D.C. on November 15, 2001:
Good morning, and thank you for coming. I would like to begin by saying that we are grateful to the government of Canada and the city of Ottawa for hosting the IMFC meeting, which had to be delayed following the tragic events of September 11. In my view, the most important message coming from Ottawa will be that the international community is coming together-the representatives of 183 member countries-to demonstrate common ground in dealing with the critical problems facing the world economy.
The IMFC Agenda
This will be a very focused meeting, concentrating on two topics. The first is the global economic situation in the aftermath of the terrorist attacks, and the response that is needed to restore growth and sustain the fight against poverty. The second topic will be the role of the IMF in combating money laundering and the financing of terrorism.
The Global Economic Situation and Policy Response
How do we see the situation in the global economy?
I have outlined the elements of that response in my October 5 statement on the global economy, which you will have seen.
We have to recognize that we face an extraordinary degree of uncertainty in the aftermath of the September 11 attacks. There is no real precedent for this situation, which makes forecasting based on previous experience look something like trying to read the tea leaves. The IMF staff, based on its analysis and extensive information from the various regions, has made an initial assessment. The outcome is that we have again had to revise our forecasts downward.
We can't exclude the possibility of a worse scenario. But we give this a much lower probability because there are a number of positive underlying factors, including the policy response that has already taken place and the effects of reforms that were introduced in the wake of the Asian crisis.
The advanced economies have a particular responsibility to ensure that their policies support an early return to sustainable growth in the world economy.
Many emerging markets and developing countries are under severe stress, but on the whole they are in a better position today to cope, as a result of reforms adopted in recent years. These include greater transparency, the implementation of standards and codes, fiscal consolidation, stronger foreign exchange reserve positions, and greater exchange rate flexibility. The reforms have also made the international financial system as a whole more resilient. It will be important for emerging markets and developing countries to stay the course of sound policies and structural reform, since markets will have little tolerance for weak fundamentals.
The IMF Stands Ready to Help Its Members
As I made clear in my October 5 statement, the IMF stands ready to help its member countries deal with the current situation—through our policy advice, technical assistance, and additional financing. In an extraordinary surveillance exercise, we have worked hard to get a good overview of the situation, and we can see from our detailed country-by-country analysis that there is a very differentiated picture. This means that we should be careful to avoid basing policies on blanket judgments.
The international community should not let the downturn in the global economy derail the efforts of low-income countries to reduce poverty. What is needed now is comprehensive support for sound, growth-oriented policies in low-income countries by the IFI's, Paris Club creditors, export credit agencies, and the donor community. Regarding the IFI's, I have been staying in regular contact with the heads of the World Bank and the regional development banks since September 11, to ensure that our actions are mutually reinforcing.
We can all be happy about the decision at the WTO meeting in Doha to start a new round of trade negotiations, which will provide a further boost to confidence and prospects for economic recovery. But I also want to be clear: it will be crucial to ensure that the words of the Doha Development Declaration are translated into concrete action to open up markets in areas of greatest importance to developing countries, such as agriculture and textiles, and to eliminate trade-distorting subsidies in the advanced countries.
Fighting Money Laundering and the Financing of Terrorism
Making globalization work for the benefit of all requires that we are also active in safeguarding the stability and integrity of the international financial system. And recent events have shown the need for stronger international cooperation to combat terrorism. For these reasons, the fight against money laundering and the financing of terrorism will rightly be the second topic on the IMFC's agenda.
Globalization and the FfD Conference
Finally, the global slowdown and the events of September 11 make it clearer than ever that we live in an interconnected world.
Initial Assessment of the Global Growth in the Aftermath of the September 11 Events
1 In addition to Japan, the contributors of loan resources for the PRGF are Belgium, China, Egypt, France, Germany, Italy, Netherlands, and Switzerland.
2 Hong Kong SAR, Indonesia, Korea, Malaysia, Philippines, Singapore, Taiwan Province of China, and Thailand.
IMF EXTERNAL RELATIONS DEPARTMENT