## Global Growth: Too Slow for Too Long

_IMF Blog, April 12, 2016_

## Source details

**Canonical URL:** [Global Growth: Too Slow for Too Long](https://www.imf.org/en/blogs/articles/2016/04/12/global-growth-too-slow-for-too-long)

## Other formats

- [Markdown version](/en/blogs/articles/2016/04/12/global-growth-too-slow-for-too-long/index.md)
- [Structured JSON version](/en/blogs/articles/2016/04/12/global-growth-too-slow-for-too-long/index.json)
- [Bundle manifest](/en/blogs/articles/2016/04/12/global-growth-too-slow-for-too-long/bundle-manifest.json)

## Bibliographic details
- Authors: Maurice Obstfeld
- Published: April 12, 2016

---

### Overview and headline findings
- Global growth "continues, but at an increasingly disappointing pace" and "has been too slow for too long."
- The new World Economic Outlook anticipates growth to accelerate slightly from 3.1 to 3.2 percent in the current year, followed by 3.5 percent growth in 2017.
- Forecasts have been progressively downgraded over time, reflecting a broad-based slowdown across countries and continuing trends highlighted in earlier World Economic Outlook editions.
- Considerable diversity in performance remains within country groups.

### Main risks and channels of downside
- Financial turbulence:
  - Since last summer, two distinct rounds of global financial turbulence occurred, featuring abrupt sell-offs of risky assets, heightened risk aversion, spikes in emerging-market sovereign spreads, and sharp falls in prices of oil and other commodities.
  - Markets largely recovered both times, but investor reactions may have exceeded what fundamentals warranted.
  - These financial swings overlie a steady trend of global financial tightening, including increasing net capital outflows from emerging markets.
  - More strains could begin to appear if conditions worsen.
- Geopolitical, humanitarian, and political risks:
  - Continuing violent instability in countries such as Syria is cratering their economies and driving millions of refugees to surrounding countries and Europe, creating a humanitarian disaster.
  - These pressures challenge the European Union’s capacity to preserve open internal borders and have coincided with increased incidence of terrorism and a rising tide of inward-looking nationalism.
  - There is a real possibility that the United Kingdom exits the European Union, damaging a wide range of trade and investment relationships.
  - A backlash against cross-border economic integration in advanced countries, including the United States, threatens to halt or reverse postwar trends toward more open trade.
  - Several large emerging market economies face deep contractions from internal political strife or geopolitical pressures, and a number of low-income and emerging market countries suffer El Niño-related drought or flooding.
- Macroeconomic implications:
  - A weaker growth baseline raises the chance that realized risks pull the world economy below "stalling speed," risking a low-growth, deflationary equilibrium characterized by some economists as secular stagnation.
  - Lack of wage growth and greater inequality have increased perceptions that growth has disproportionately benefited mobile elites and owners of capital, reinforcing inward-looking and nationalistic policies.
  - Lower growth reduces the "room for error" for policymakers.

### Policy framework: three-pronged approach
- Central recommendation:
  - Adopt a three-pronged policy approach based on monetary, fiscal, and structural policies to both strengthen the baseline and prepare contingency plans for downside scenarios.
- Monetary policy:
  - Continue monetary accommodation where deflationary pressures and negative output gaps remain.
  - Monetary policy needs support from fiscal and structural policies to be effective.
- Fiscal policy:
  - Infrastructure investment is attractive in a number of countries given currently low real borrowing rates.
  - Fiscal support of research and development could yield notably rich payoffs.
  - Balanced budget tax reforms can move fiscal policy toward more growth-friendly directions while supporting aggregate demand, labor force participation, and social cohesion.
- Structural policies:
  - A range of well-sequenced structural reforms can boost potential output, especially if accompanied by complementary fiscal support.
  - Pro-competitive product market reforms can be expansionary in the near term, as seen in Canada, the Netherlands, Spain two decades ago, and Italy in the 2000s.
  - Further financial sector strengthening (as detailed in the Global Financial Stability Report) is essential to create a context in which monetary, fiscal, and structural policies can be more effective.

### Contingency planning and international cooperation
- Policymakers should identify mutually reinforcing fiscal and structural policy packages to deploy collectively if downside risks materialize.
- Continue international cooperation to improve the functioning of the international monetary system and the stability of international finance to enhance global economic resilience.
- The outlook's downside possibilities call for an immediate, proactive response: "there is no longer much room for error." Joint recognition of shared risks and coordinated preparation can bolster confidence, support growth, and guard against a derailed recovery.

*Global Growth: Too Slow for Too Long — Maurice Obstfeld, April 12, 2016.*

---

## Content in this bundle

- **全球经济：在太长时间里增长太慢; iMFdirect博客; 2016年4月12日**
  - [全球经济：在太长时间里增长太慢; iMFdirect博客; 2016年4月12日 (Markdown version)](/external/chinese/np/blog/2016/041216c.pdf.md){rel="alternate" type="text/markdown"}
  - [全球经济：在太长时间里增长太慢; iMFdirect博客; 2016年4月12日 (PDF)](/external/chinese/np/blog/2016/041216c.pdf){rel="external" type="application/pdf"}
- **世界経済の成長:余りにも長期にわたる余りにも 緩慢な成長 : モーリス・オブストフェルド; iMFdirect ブログ2016年4月12日掲載**
  - [世界経済の成長:余りにも長期にわたる余りにも 緩慢な成長 : モーリス・オブストフェルド; iMFdirect ブログ2016年4月12日掲載 (Markdown version)](/external/japanese/np/blog/2016/041216j.pdf.md){rel="alternate" type="text/markdown"}
  - [世界経済の成長:余りにも長期にわたる余りにも 緩慢な成長 : モーリス・オブストフェルド; iMFdirect ブログ2016年4月12日掲載 (PDF)](/external/japanese/np/blog/2016/041216j.pdf){rel="external" type="application/pdf"}
- **Слишком долгий период слишком медленного роста мировой экономики**
  - [Слишком долгий период слишком медленного роста мировой экономики (Markdown version)](/external/russian/np/blog/2016/041216r.pdf.md){rel="alternate" type="text/markdown"}
  - [Слишком долгий период слишком медленного роста мировой экономики (PDF)](/external/russian/np/blog/2016/041216r.pdf){rel="external" type="application/pdf"}

---

## References

- [عربي](http://blog-montada.imf.org/?p=4175)
- [World Economic Outlook](http://www.imf.org/external/pubs/ft/weo/2016/01/index.htm)
- [Global Financial Stability Report](http://www.imf.org/external/pubs/ft/gfsr/2016/01/index.htm)
- [World Economic Outlook](http://www.imf.org/external/pubs/ft/survey/so/2016/RES040616A.htm)
- [story](http://www.imf.org/external/pubs/ft/survey/so/2016/NEW041216A.htm)
- [interview](http://www.imf.org/external/mmedia/view.aspx?vid=4841191545001)

_Source: https://www.imf.org/en/blogs/articles/2016/04/12/global-growth-too-slow-for-too-long_