G20: Step Up to Boost Inclusive Growth
IMF Blog, November 28, 2018
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- Authors: Christine Lagarde
- Published: November 28, 2018
Overview and context
- Publication: Christine Lagarde, November 28, 2018
- Global outlook:
- IMF World Economic Outlook (October) forecast global growth of 3.7 percent for 2018 and 2019.
- These estimates were 0.2 percentage points below July estimates, largely due to rising external and financial pressures on emerging markets and a tangible increase in trade tensions.
- Recent data point to further slowing: third-quarter growth has been surprisingly low in emerging market economies such as China, and in the euro area.
- Risks highlighted: rising trade tensions, possibility of a no-deal Brexit, adverse demographics, slow productivity in advanced economies, and excessive inequality undermining public support for reforms.
Potential gains from reforms
- Implementing a multilayered set of reforms could potentially add a 4 percent boost to the GDP of the G20 countries.
- IMF research suggests that liberalizing trade in services could add about ½ percent, or $350 billion, to G20 GDP in the long run.
- Joint implementation of the suggested measures is calculated to increase G20 GDP by 4 percent.
Key economic figures and risks
- Global growth forecast: 3.7 percent for 2018 and 2019.
- Revision magnitude: 0.2 percentage points downgrade from July estimates.
- Long-run services liberalization gain: ½ percent; equivalent to $350 billion.
- Global debt level: $182 trillion (IMF estimates).
- Noted vulnerabilities: heightened external pressures for some emerging economies amid monetary tightening and rising trade tensions.
Three priority areas for policy action
- First, strengthen defenses
- Create more fiscal room for maneuver by undertaking meaningful fiscal consolidation now—especially in high-debt countries such as Italy and in several emerging economies.
- Continue monetary policy normalization in advanced economies on a gradual, well-communicated, and data-dependent path.
- For emerging economies facing external pressures:
- Rely on exchange rate flexibility where inflation targets are well-anchored.
- Consider capital flow management measures as part of a broader policy package where pressures threaten to be disruptive.
- Second, teamwork is the winning tactic
- Steer clear of new trade barriers and reverse recent tariffs.
- Use fiscal and structural policies across countries to reduce global imbalances and boost growth (examples noted: Germany, the United States, China).
- Address record levels of debt and increase transparency of the scale and terms of borrowing, especially in low-income countries.
- Avoid rollback of post-crisis advances in financial sector regulation; act to mitigate financial sector risks.
- Third, pick up the pace (structural reforms)
- Advanced economies: relax product market restrictions to spur innovation and lower prices; ease access to professional services (noted importance for Japan and many euro area countries); increase support for research (noted importance for Canada, Germany, and the United Kingdom).
- Emerging market economies: pursue product and labor market reforms; reduce reliance on distortionary taxes (noted economies: Brazil, China, India, Russia).
- Raise women’s participation in the workforce to boost growth and enhance inclusiveness.
Conclusion and call to action
- The G20 played a crucial role in the global recovery over the past decade, but new risks are returning.
- Addressing these risks requires policies that make sense nationally and internationally, strengthening the global financial safety net, and ensuring a well-equipped and well-resourced IMF at its center.
- Final appeal: as the G20 meets in Buenos Aires, act swiftly and act together.
Source: G20: Step Up to Boost Inclusive Growth — Christine Lagarde, November 28, 2018.
Content in this bundle
- Staff Discussion Note
- 二十国集团：大力促进包容性增长; 拉加德; 2018 年11 月28 日
- G20 包摂的な成長を促進するための取組み強化; クリスティーヌ・ラガルド著 IMFブログ 2018年11月28日
- Группа 20-ти: активизация действий для повышения темпов инклюзивного роста
References
- عربي
- Português
- https://www.imf.org/wp-content/uploads/2018/11/BLOG-1024x600-Buenos-Aires-Puerto-Madero-Florian-Kopp-imageBROKER-Newscom-ibpremium371719.jpg
- World Economic Outlook
- slowed momentum
- https://www.imf.org/wp-content/uploads/2018/11/eng-nov-19-md-g20_rev.jpg
- increase G20 GDP by 4 percent
- G-20 Surveillance Note
- Steering the World Toward More Cooperation, Not Less
