## IMF Survey : Lagarde: Prevent “New Mediocre” From Becoming “New Reality”

_IMF News, April 9, 2015_

## Source details

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## Bibliographic details
- Published: April 9, 2015

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### Global outlook and immediate challenge
- Speech at the Atlantic Council on April 9 called for policymakers to "pick up the pace of the recovery and create more growth now and in the future."
- "Six months ago, I warned about the risk of a ‘new mediocre’—low growth for a long time. Today, we must prevent that new mediocre from becoming the ‘new reality’."
- Global recovery described as continuing, but "moderate and uneven."
- Global growth was "3.4 percent last year" and is "roughly the average for the last three decades," yet "just not good enough."
- IMF Managing Director emphasized combining policies to "boost today’s growth with those fortifying tomorrow’s prospects."

### Lifting growth today — risks and policy responses
- Macroeconomic risks:
  - Risk of "low growth-low inflation, and high debt-high unemployment" persists in a number of advanced economies.
  - Recommended policy responses: use demand policies to lift today’s growth; continue monetary accommodation—"especially in the euro area and Japan"; calibrate fiscal policy to the strength of the recovery.
- Financial risks:
  - Risks to global financial stability are rising and migrating (for example, "from banks to nonbanks and from advanced economies more toward emerging markets").
  - Global-level measures: ensure market liquidity during times of stress; improve macro- and micro-prudential policies for nonbanks; follow through on the regulatory reform agenda.
  - Country-level measures: limit excessive risk-taking and manage existing vulnerabilities.
- Regional and group observations:
  - Advanced economies are doing a bit better than last year; prospects in the euro area are improving.
  - Forecasts for most emerging and developing economies are a bit worse than last year, mainly owing to lower commodity prices, but "there is tremendous diversity within this group."

### Stronger growth tomorrow — structural reforms and priorities
- Potential growth is being pared down in both advanced and emerging economies, largely reflecting lasting scars from the financial crisis.
- Structural reforms should go hand-in-hand with macroeconomic and financial policies to raise confidence and generate investment.
- Infrastructure investment:
  - "Our own research shows that boosting efficient infrastructure investment can be a powerful impetus to growth both in the short run and in the long run."
- IMF research priorities and payoffs highlighted:
  - First, reversing the decline in productivity growth in advanced economies requires lowering barriers to entry in product and services markets.
  - Second, removing barriers to labor force participation is key to tackling inequality and ensuring broad-based growth.
  - Third, there are potentially huge global gains from further trade reform and integration.

### International cooperation and institutional reforms
- Need for an open and resilient multilateral system to leverage national benefits and avoid negative spillovers from inconsistent policies.
- Emerging and developing countries should have greater weight and voice in global economic institutions to reflect their contributions and responsibilities.
- Call for the U.S. Congress to ratify the IMF’s 2010 quota and governance reforms so these measures can become effective.
- Proposal to increase the role of the IMF’s Special Drawing Rights as a global reserve asset and to facilitate integration of dynamic emerging markets into the global economy.
- Strengthening the international development system:
  - Highlighted three critical issues: financing for development, the new "sustainable development goals" or SDGs, and climate change.
  - IMF contributions: financing, policy advice and analysis, capacity building, and technical assistance.
  - "Here, 2015 presents a special moment: an opportunity to make a tangible difference in the lives of a large number of people in the world—especially the poorest people."

*Source: IMF Survey — speech by IMF Managing Director Christine Lagarde at the Atlantic Council, April 9, 2015.*

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## Content in this bundle

- [New040915aapdf (PDF)](/-/media/websites/imf/imported/external/arabic/pubs/ft/survey/so/2015/new040915aapdf.pdf){rel="external" type="application/pdf"}

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## References

- [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)
- [PRESS CENTER](http://presscenter.imf.org/)
- [In The News](https://www.imf.org/en/news/search)
- [Read the speech](http://www.imf.org/external/np/speeches/2015/040915.htm)
- [Watch the webcast](http://www.imf.org/external/mmedia/view.aspx?vid=4163245619001)
- [Lower potential growth: A new reality](http://www.imf.org/external/pubs/ft/survey/so/2015/NEW040715A.htm)
- [How to harness trade for growth](http://www.imf.org/external/pubs/ft/survey/so/2015/POL032315A.htm)
- [Blog: No puzzle about weak business investment](http://blog-imfdirect.imf.org/2015/04/07/no-puzzle-about-weak-business-investment-its-the-economy/)
- [Spring Meetings webpage](http://www.imf.org/external/spring/2015/index.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/53/sonew040915a_