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G-20: Five Ways to Spark Growth

Once again, we face the prospect of weak and fragile global growth. Released earlier this week, the IMF’s update to the global economic outlook expects global growth at 3.1 percent and 3.4 percent in 2016 and 2017, respectively, slightly down from April estimates. The global outlook, which was set for a small upward revision prior to the U.K.’s referendum, has been revised downward, reflecting the increased economic, political, and institutional uncertainty.

The setback from “Brexit” adds to mounting concerns that a sustained recovery–with more jobs, higher living standards, and declining debt levels–remains elusive. The risks of a slow growth environment go beyond pure economic costs—they could spur social tensions and the risk of protectionism that could further hurt the global economy.  Adding to uncertain economic prospects, increasing geopolitical risks have cast a shadow over the global economy.

How to power the global growth engine will be one of the key themes of the G-20 meetings this weekend in Chengdu, China.  An IMF staff note for the G-20  outlines the urgent need for a broad-based policy effort to contain risk and reinvigorate growth both in the short and longer term. The Note explores five main areas to rev up growth.  These include:

The G-20 growth strategy stresses the need for more inclusive and sustainable growth. The bottom line, however, is that strong global growth will not return without decisive policy action.

For details, read the IMF staff G-20 Surveillance Note