## Time to Act Now: It’s All About the Right Policy Mix

_IMF Blog, October 19, 2017_

## Source details

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## Bibliographic details
- Authors: The Editors
- Published: October 19, 2017

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### Global outlook and recent recovery
- IMF raised world growth forecasts to 3.5 percent this year and 3.6 in 2018, from 3.2 in 2016.
- Nine years after the global financial crisis of 2008, the outlook is improving: global growth has recovered, demand remains robust, and financial markets are buoyant.
- Near-term risks described as "balanced" with confidence and market sentiment remaining strong.
- Managing Director Christine Lagarde: "We should not let a good recovery go to waste."

### Key risks, distributional challenges, and structural concerns
- Inequality is rising within countries; productivity has risen faster than wages, contributing to global discontent (Deborah Greenfield, ILO).
- Recovery remains weak in many countries; inflation is below target in most advanced economies.
- Prospects are lackluster for many emerging market and developing economies in sub-Saharan Africa, the Middle East, and Latin America; fuel exporters are hit by lower commodity revenues.
- High policy uncertainty raises the possibility that missteps, shocks, and crises could materialize.
- Cross-cutting challenges highlighted: inequality, gender, corruption, climate change, and rapid technological change (including Fintech).
- Winnie Byanyima (Oxfam International): extreme inequalities are "the consequences of mistaken beliefs and misguided policies run amok."

### Policy mix: recommendations and imperatives
- The central message: use all policy tools—structural, monetary, and fiscal—to achieve "strong, sustainable, balanced, and inclusive growth."
- "Right now is the moment for action." (David Lipton, First Deputy Managing Director)
- Policy makers should "seize the moment" (Maurice Obstfeld, Chief Economist).
- Jens Weidmann (President of the Deutsche Bundesbank): enhance resilience and re-examine current macroeconomic policy mix.
- IMFC communique: safeguard current growth momentum by maintaining the right policy mix, align monetary policy with IMF recommendations, and adopt fiscal policies that are in line with countries’ needs.
- Financial sector point: tighter regulation has led to stronger global balance sheets with improved capital and liquidity buffers, but legacy bank issues persist and monetary accommodation may lead to a search for yield in unchartered territories—posing risks to growth and calling for strengthened financial and macroeconomic policy coordination.
- Joint action and international cooperation are emphasized: "Recognizing that all countries benefit from cooperation, we will work to tackle common challenges." (IMFC)

### Seizing opportunities through human capital and inclusivity
- Investment in education and youth emphasized as critical in a "post-oil world"; Sherif Kamel: "people could be the oil of the 21st century."
- Growth broadening provides an environment to address deeper economic issues and to make policy changes that improve inclusivity and resilience.

### Voices and country example
- Papua New Guinea: custodian of the third largest rainforest and 20 percent of world tuna stocks; aims for responsible sustainability and inclusive economic growth.
- Recent difficulties for Papua New Guinea: El Nino drought, low oil and gas prices, under-performance, declining government revenues, rising operating costs, and foreign exchange imbalances affecting commercial activity and confidence.
- Charles Kauvu Abel (Governor of the Bank and the Fund for Papua New Guinea): "Like many other developing countries, we know that we cannot, and should not, face these challenges alone and in isolation."

### Historical continuity and cooperation
- Reference to IMF’s first ever Annual meeting in 1946 and Executive Directors’ 1946 comment: "The road ahead is not an easy one... We do not underestimate the difficulties facing us."
- The Fund’s historical role underscores the call for international cooperation: "An indispensable element in a prosperous world economy is cooperation among all countries for establishing and maintaining an enduring peace." (IMF’s Executive Directors, 1946)

_Contributors: The Editors; Meera Louis and other editors — October 19, 2017_

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## References

- [https://www.imf.org/wp-content/uploads/2017/10/BLOG-AMs-Wrap-up-1024x700-iStock-612398934-002.jpg](https://www.imf.org/wp-content/uploads/2017/10/BLOG-AMs-Wrap-up-1024x700-iStock-612398934-002.jpg)
- [Financial markets](https://blogs.imf.org/2017/10/11/financial-stability-improves-but-rising-vulnerabilities-could-put-growth-at-risk/)
- [World Economic Outlook](https://blogs.imf.org/2017/10/10/global-economic-upswing-creates-a-window-of-opportunity/)
- [2017 Annual Meetings of the IMF and World Bank](http://www.imf.org/external/am/2017/index.htm)
- [seminar](http://www.imf.org/external/POS_Meetings/SeminarDetails.aspx?SeminarId=263)
- [panel](http://www.imf.org/external/POS_Meetings/SeminarDetails.aspx?SeminarId=270)
- [Inequality](https://blogs.imf.org/2017/10/11/inequality-fiscal-policy-can-make-the-difference/)
- [gender](http://www.imf.org/external/themes/gender/)
- [corruption](https://blogs.imf.org/2017/09/28/corruption-in-latin-america-a-way-forward/)
- [climate change](https://blogs.imf.org/2017/09/27/the-unequal-burden-of-rising-temperatures-how-can-low-income-countries-cope/)
- [Fintech](https://blogs.imf.org/2017/06/20/fintech-capturing-the-benefits-avoiding-the-risks/)
- [Ted-style talk](http://www.imf.org/external/POS_Meetings/SeminarDetails.aspx?SeminarId=262)
- [panel](http://www.imf.org/external/POS_Meetings/SeminarDetails.aspx?SeminarId=267)
- [International Monetary and Financial Committee (IMFC) communique](http://www.imf.org/en/news/articles/2017/10/14/cm101417-communique-of-the-thirty-sixth-meeting-of-the-imfc)
- [https://www.imf.org/wp-content/uploads/2017/10/black-and-white-conference-1024x600.jpg](https://www.imf.org/wp-content/uploads/2017/10/black-and-white-conference-1024x600.jpg)
- [https://www.imf.org/wp-content/uploads/2017/10/annual-meetings-1024x600-1.jpg](https://www.imf.org/wp-content/uploads/2017/10/annual-meetings-1024x600-1.jpg)

_Source: https://www.imf.org/en/blogs/articles/2017/10/19/time-to-act-now-its-all-about-the-right-policy-mix_