Transcript of IMF Managing Director's Press Conference
IMF News, October 12, 2017
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- Authors: Agreement.. But
- Published: October 12, 2017
Global growth outlook and overarching assessment
- Recovery described as "stronger" and "much more broadly based than in recent years."
- IMF growth projections cited:
- "3.6 percent this year"
- "3.7 percent next year"
- Both "0.1 percentage points higher than our July projection"
- "much higher than the 3.2 growth that we had in 2016"
- "Measured by GDP, nearly 75 percent of the world is experiencing an upswing."
- Recovery characterized as "the broadest‑based recovery in the last 10 years" and "driven by investment, by consumption, and by trade."
- Emerging market economies noted as having "been providing about 80 percent of growth in the last few years" while recovery is now "shared between the emerging market economies ... but also with other countries, like Europe, like Japan, and the U.S."
- Caveats:
- "The recovery is not complete."
- "Last year, 47 countries experienced negative growth on a per capita basis."
- Structural challenges noted: lagging productivity, impact of technology on aspirations, excessive income inequality, rising political tensions, and skepticism about globalization.
- IMF membership referenced: "189 member countries."
Risks and potential disruptions ("fixing the roof while the sun is shining")
- Identified risks that could derail momentum:
- Erosion or rollback of financial regulatory reforms (Basel-related discussions).
- Disruptions from financial innovation (fintech) requiring global supervision; explicit note: "I am not here referring to bitcoins in particular."
- Tightening of financial markets with potential capital outflows from emerging market economies or low‑income countries that had experienced a "search for yield."
- Trade disruption / protectionism: "trying to rein trade, trying to reduce it would not be helpful."
- Long‑lasting issues: "lagging productivity; ... low wages ... rising inequalities."
- Communication and gradualism emphasized for policy normalization to mitigate spillovers.
Policy recommendations and "season of action"
- Three‑pronged approach reiterated: "monetary, fiscal, structural reforms."
- Monetary policy:
- "Monetary policy that continues to support the recovery while also recognizing risks created by easy finance conditions."
- Balancing act "determined by the situation of the country based on the independence of the banks and their mandate."
- Fiscal policy:
- "Countries with healthier finances should invest more ... through infrastructure spending, strengthening safety nets, investing in education, and allowing women to access the labor market."
- "Other countries should ... use this moment ... to reduce public debt relative to GDP."
- Structural reforms (examples provided):
- "Reform of the labor market"
- "Reform of access to the service markets"
- "Removing the rents that sometimes cripple those markets, removing barriers"
- "Investing in research and development"
- "Shrinking disparages in access to health and education"
- "Promoting lifelong learning"
- Global cooperation priorities:
- "Fighting corruption"
- "Protecting the progress made on financial regulatory reform"
- "Tackling climate change"
- "Improving the global trading system"
- "Adjusting to the impact of the combined breakthrough technologies ... in particular, the financial markets"
- Emphasis on policy design that helps "more people and more countries to benefit" and makes recovery "sustainable" and "inclusive."
Country and regional comments
- China:
- IMF "upgraded our forecast for China, particularly in 2017" attributed to "fiscal stimulus."
- Welcomed actions "by the People’s Bank of China, to actually tame ‑‑ reduce credit."
- Recommended continuation of policies plus "reform of the state‑owned enterprise sectors" and further capacity reduction.
- NAFTA and trade negotiations:
- Ongoing NAFTA negotiations described as normal "to look into it, go under the skin of the agreement."
- Trade agreements should account for "changes in the markets in the last 20 years" and include measures to help affected workers adjust.
- Brexit:
- Brexit process described as ongoing; urged prompt conduct to "reduce the level of uncertainty and anxiety."
- Clarity on timetable and negotiation pillars would reduce uncertainty.
- Concerns raised about a "hard deal" or WTO‑only outcome and its disruption to integrated arrangements (e.g., airline rights, residency).
- Europe and regional financial arrangements:
- Europe identified among "growth leaders" in the recovery.
- No fear of losing IMF centrality; the IMF should remain "at its center" of the international financial safety net.
- Regional Financial Arrangements (RFAs) mentioned: Chiang Mai Initiative (Asia), Arab Monetary Fund (Middle East), European Stability Mechanism possibly transforming into an EMF.
- Greece:
- Acknowledged "huge efforts" of the Greek people.
- July program "subject to the debt restructuring that we have always, consistently indicated as necessary."
- IMF "are not asking for any new measure whatsoever" and will monitor compliance and continue discussions with European partners.
- Africa:
- Currency zones in Africa differ; CEMAC noted:
- "CEMAC region ... all six countries have sought our support."
- "We have four programs in place with four countries and two under negotiations."
- Strategy: improve reserves, fiscal consolidation, diversify economies away from oil dependence.
- Sub‑Saharan Africa characterized by "growth is way suboptimal" with "average growth of about 2.5 percent," which is "too low for the demographic expansion of the region." Recommendation: stabilize, build buffers, diversify sources of growth.
- North Africa:
- No one‑size‑fits‑all approach; country‑specific recommendations.
- Encouraged "more interregional cooperation."
- Morocco cited as having benefited from a flexible credit line.
- Tunisia urged to diversify economy, meet budgetary commitments, and manage wage bill growth.
- Jamaica:
- IMF program described as supported across political transitions; emphasis on social safety nets in program design.
- Managing Director will "carefully look at the numbers" referenced by questioner regarding poverty and recent negative growth.
- Caribbean hurricane‑affected countries:
- IMF engaging in dialogue "on how we can organize financing, including concessional financing when that is available" and how to refinance existing financing.
Inequality and taxation
- Disagreement with the statement that "taxing the rich would be the most efficient way to reduce inequalities."
- Emphasis on closing the gender gap as "the most efficient way to reduce the inequalities" — including access to labor market, finance, and compensation.
- Fiscal Monitor analysis noted: "given the significant drop in average tax rate in most advanced countries, increasing the higher brackets would not prejudice growth." Policy choices remain for national decision‑makers.
Communication, timing, and IMF role at the Annual Meetings
- Managing Director framed the moment as an opportunity for a "season of action."
- IMF to share research and comment on the World Economic Outlook and Global Financial Stability Report during the Meetings to help policymakers consider domestic measures and their global spillovers.
- Press conference participants listed: Christine Lagarde (Managing Director), David Lipton (First Deputy Managing Director), Gerry Rice (Director of Communications).
- Event metadata from the transcript:
- "2017 Annual Meetings" — "Washington, D.C." — "October 12, 2017"
Source: Transcript of IMF Managing Director's Press Conference, October 12, 2017.