Press Release No. 14/540

Press Release: IMF and Bank of Korea Host a Discussion on Macroeconomic Rebalancing for Sustainable Growth

November 25, 2014

The International Monetary Fund (IMF) Regional Office for Asia and the Pacific (OAP) and the Bank of Korea jointly organized a conference on November 20−21 on macroeconomic rebalancing for sustainable growth. The conference, which was held in Seoul, brought together leading academics, practitioners, and senior central bank officers.

In his opening address Bank of Korea Governor Juyeol Lee urged countries to work together, combining their wisdom to secure sustainable growth, including through the Brisbane Action Plan. His words were echoed in the keynote speech delivered by Mr. John Lipsky, Senior Fellow at Johns Hopkins University, who stressed the importance of a cooperative approach to setting macroeconomic and structural policy initiatives, which holds out the prospect of leading to an optimal economic outcome.

The discussion emphasized that global imbalances have narrowed in flow terms since their peak in 2006-2008, with real exchange rate adjustment playing a smaller role in this process than what had previously been expected. However, large global imbalances in stock terms remain as a legacy, and are still increasing. Against this background, participants focused on the need to pursue both rebalancing and increasing potential growth, by reducing within-country income inequality, boosting infrastructure investment, and pursuing structural reforms. Lessons were also drawn from several emerging market economies that have weathered the most recent global financial crisis better than the Asian crisis, partly because they have used expansionary monetary policies appropriately and allowed greater exchange rate flexibility. 

In his closing remarks, OAP Director Odd Per Brekk noted that one key take away from the discussion was that macroeconomic policies need to play the central role in pursuing rebalancing and dealing with the short-term impact of crises, but need to be complemented by structural reforms to sustain long term growth.

For more information on the conference, please see:

http://www.imf.org/external/np/seminars/eng/2014/bok/index.htm