IMF Spring Meetings 2017: Keeping Growth on Track

IMF Blog, April 28, 2017

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Bibliographic details

• Authors: Christine Lagarde
• Published: April 28, 2017

Overview and participation

• The world’s economic leaders and stakeholders met at the 2017 IMF and World Bank Spring Meetings amid a more positive outlook on global growth, which is forecast to hit its fastest pace in five years.
• The meetings emphasized protecting growth momentum given policy and political uncertainties and ensuring broad sharing of gains from global integration and technological progress.
• Participation: more than 10,000 people; around 650 journalists, 160 parliamentarians from 68 countries, and a record 850 civil society representatives.

Innovation, technology, and jobs

• Technological advances eliminate the need for some jobs but “won’t make human work obsolete,” according to Walter Isaacson.
• Key insight: “innovation is a team sport” — advances arise from collaboration between humans, machines, teams of people, government, and academia.
• IMF and institutions have a major role in shaping policies to cope with technological disruption.

FinTech and transformation of financial services

• FinTech transforms how people spend, save, invest, and trade; open questions remain about the speed and extent of transformation in financial services, markets, and regulation.
• Panel consensus: blockchain technology and artificial intelligence will transform banking similarly to how the internet transformed retailing, entertainment, and news media.
• Implications:
  • Technologies won’t make banks obsolete, but some banks will go out of business and others must adapt business models.
  • Many banks are likely to form alliances with technology-driven financial-service providers.
• Moderated by IMF Deputy Managing Director Tao Zhang and involved the IMF’s High Level Advisory Group on FinTech.

Driving digital financial inclusion in Africa

• Mobile startups are changing Africa’s financial landscape; example: Nigeria’s Paga provides money transfers and payment systems through mobile phones, offsetting high costs of conventional banking.
• Quoted: “We have a wider reach than all 23 banks in Nigeria put together,” — Tayo Oviousu, founder of Paga.
• Tanzania: more than 12 million Tanzanians use mobile platforms to save money and apply for credit.
• Quoted: “Fast forward to the future and you land in Tanzania as far as technology is concerned,” — Benno Ndulu, governor of the Central Bank of Tanzania.

Emerging markets: resilience and risks

• Emerging market challenges: tighter US monetary policy, a stronger dollar, heightened euro‑area uncertainty, rise in economic nationalism and trade protectionism, and rollback of financial regulation.
• Policy messages:
  • Many emerging markets have adopted strong economic policies, but must resist zero‑sum thinking in international relations.
  • Strong financial regulation is essential; avoiding a “race to the bottom” is critical.
  • Vigilance is key to guard against risk (IMF’s Tao Zhang).

Gender and macroeconomics

• The IMF is incorporating gender analysis and advising on specific policies in annual consultations.
• Policy view: “The fastest road to an inclusive, more equal, and diversified economy is investing in women,” — Christine Lagarde.
• Examples and initiatives:
  • Coca‑Cola initiative to empower five million women entrepreneurs globally over the course of this decade (Muhtar Kent).
  • Norway: flexible parental leave, work hours, and affordable child care help close the gender gap (Siv Jensen).
  • Concern: “The global economy is still in many ways ‘rigged against women,’” — Winnie Byanyima, Oxfam.

Global economy outlook and inclusiveness

• Markets have a benign view (Axel Weber); advanced economies face very low growth, inflation, and interest rates as persistent features.
• Distributional issues from technology and trade contribute to public discontent.
• Emerging and developing economies are improved but need more investment in innovation and an open trade system (Masood Ahmed).
• Suggested approach: pause to reassess what doesn’t work in globalization before proceeding (Raghuram Rajan).

Sub‑Saharan Africa: return to growth

• Region faces a broad-based slowdown and a decline in per capita income for the first time in 20 years.
• IMF advice (Mitsuhiro Furusawa): adopt more flexible exchange rates, rein in public debt, and boost infrastructure spending.
• Policy direction: shift from government‑led public investment to more private‑sector led investment (Alamine Ousmaine Mey).
• Emphasis on home‑grown solutions and effective execution.

SDR’s role 50 years later

• Historical focus: SDR as an official reserve asset.
• Developments: inclusion of the Chinese renminbi in the SDR basket and issuance of SDR‑denominated financial instruments in China raise questions about broader SDR roles (denomination for financial instruments or unit of account).
• Views:
  • Without the SDR, the monetary system could become more fragmented with increased self‑insurance and liquidity risks (Mohamed El‑Erian).
  • “If you just rely on some central bank subsidy, it never will work,” — Yi Gang.
  • “We believe there’s a market need and there’s a market drive that can be sustainable to developing an SDR market,” — Yi Gang.

Productivity and demographics

• Demographic change: aging and shrinking working‑age populations raise concerns for 2050 labor supply.
• Key view: “Is demographics destiny? The answer is no,” — Catherine L. Mann.
• Policy levers: childcare and other policies can increase female labor force participation and hours worked, offsetting negative impacts on potential output.
• Panel explored automation, technology, and immigration policies as responses to demographic change.

Central banks and inclusive growth

• Technology expands financial participation; IMF Financial Access Survey shows 17 economies in sub‑Saharan Africa where mobile money accounts exceed commercial bank depositors (David Lipton).
• Broader financial participation improves monetary policy effectiveness (Perry Warjiyo).
• Central bank policies can affect income and wealth despite distributional policies often lying outside explicit central bank mandates (Sharon Donnery).
• Regulatory environment is crucial to digital finance successes (Patrick Njoroge).
• Conclusion: central banks have a key role in enhancing inclusive growth through linkages between monetary policy effectiveness, financial inclusion, and stability.

Conversation on the US economy

• US Treasury Secretary Steven Mnuchin: “What’s good for the United States is good for the world.”
• IMF role: evaluate monetary and capital systems and provide feedback.
• Mnuchin’s domestic priorities: simplify a “very uncompetitive” business tax code and U.S. personal tax law (“the tax code is just way, way, way too complicated”).
• Funding reforms: administration seeks reforms “that pay for themselves with growth.”

Fiscal digitalization and public finance

• Technology is transforming government decisions and public finance systems.
• Technology can push fiscal policy frontiers and provide opportunities for tax policy and systems (David Lipton).
• Political priority is necessary: “If fiscal digitalization is not a government priority, it will not happen,” — Andrew McAfee.
• Example: In India, 250 million people receive cooking gas subsidies digitally, directly into bank accounts, with no leakage or corruption (Arvind Subramanian).

Human stories and outreach

• Public sessions highlighted personal stories, such as Uganda’s Queen of Chess, Phiona Mutesi, illustrating inspiration for youth regionally and globally.

IMF Spring Meetings 2017: Keeping Growth on Track (page overview).

References

• forecast
• program of seminars
• Innovation, Technology, and Jobs
• FinTech and the Transformation of Financial Services
• Driving Digital Financial Inclusion in Africa
• Emerging Markets: Resilience in a New World
• Gender and Macroeconomics: What’s Next?
• Global Economy on an Upswing: Can It Work for All?
• Sub-Saharan Africa: How to Return to Vigorous Growth?
• 50 Years Later: The SDR’s Role in the International Monetary System
• Productivity in the Age of Fewer, Older Workers
• Central Bankers and Inclusive Growth
• A Conversation on the US Economy
• Digitalization: Revolutionizing Fiscal Policy and Systems
• Watch the conversation here.
• here