## Globalization and Growth: A Balancing Act, Says Lipton

_IMF News, October 17, 2016_

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## Bibliographic details
- Published: October 17, 2016

---

### Main messages from the 2016 Annual Meetings
- Date: October 17, 2016
- International community must work together to strengthen global growth and address rising discontent in advanced economies.
- Need to balance:
  - strengthening growth and maintaining globalization; and
  - dealing with disruptions and dislocations from interconnectedness and economic change.
- Greater openness to examining links between political issues and economic issues; IMF staff presented analysis and economic assessments.

### Policy mix and available tools
- IMF recommendation: a three-pronged approach—using monetary, fiscal, and structural policies.
- Observations on monetary policy:
  - Monetary policy has been the first line of defense for low growth and low inflation in advanced economies, but it is being over-stretched.
  - There are synergies in combining monetary support with growth-friendly fiscal and structural policies.
- Recommended approach:
  - Put together differentiated policy packages for each country.
  - Coordinate actions across countries where possible—“the whole will be greater than the sum of the parts.”
- Concerns highlighted:
  - Prolonged low-interest rate environment.
  - Negative consequences of over-reliance on monetary policy.
- Emphasis on political leadership to implement national actions, including:
  - donor support for countries dealing with refugees and displaced persons;
  - support for those affected by technological displacement or by inequality.

### Emerging markets: trends and risks
- IMF projection for growth in 2016: unchanged (the projection for growth this year has not been revised).
- Short-run picture described as “okay”:
  - Several major emerging economies have bottomed out.
  - Capital inflows to several emerging economies have picked up, though not as strongly as in the past.
- Differentiation across countries:
  - Some countries doing very well (India cited as a prominent example).
  - Outcomes vary depending on whether a country is a commodity exporter.
- Warning:
  - If advanced economies fail to restore stronger growth and inflation toward targeted levels, their weaker performance will be debilitating over time.
- On capital inflows:
  - IMF has analyzed interactions between advanced-economy monetary policy and capital flows.
  - Policy recommendations have been broadly followed: use of exchange rate flexibility and building buffers against potentially destabilizing financial flows.

### Low-income countries and commodity price effects
- Depressed commodity prices have negatively affected a number of low-income countries.
- Regional mood: widespread disappointment in Africa due to low average growth, though some non-oil and non-commodity exporters continue to grow rapidly.
- IMF response and outlook:
  - Working to help members navigate this period.
  - More optimistic about long-run prospects where countries are:
    - building buffers;
    - using capacity development to improve economic policy;
    - investing in hard and soft infrastructure, health, and education.
  - Low growth period seen as a challenge but one that countries are responding to in ways that could improve future prospects.

### Concluding outlook and priorities going forward
- Core message: there remains “a great promise from globalization” if negative side effects and spillovers are managed.
- Vital priorities emphasized:
  - Convincing member countries to maintain integration, interconnectedness, and openness.
  - Ensuring emerging markets and developing countries remain interconnected to secure demand for exports, investment capital, and technology.
  - Continued IMF work alongside actions by member countries to strengthen growth and address side effects of technological change and interconnectedness.

*Interview summary of remarks by First Deputy Managing Director David Lipton at the October 2016 Annual Meetings.*

---


## References

- [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)
- [PRESS CENTER](http://presscenter.imf.org/)
- [Policy](https://www.imf.org/en/news/search)
- [Watch the Lipton video](http://www.imf.org/external/mmedia/view.aspx?vid=5164141717001)
- [IMFC Communique](http://www.imf.org/en/News/Articles/2016/10/08/AM16-cm100816-Communique-of-the-Thirty-Fourth-Meeting-of-the-IMFC)
- [Global outlook](http://www.imf.org/en/News/Articles/2016/10/03/AM2016-NA100416-WEO)
- [Trade slowdown](http://www.imf.org/en/News/Articles/2016/09/26/NA092716%20Keeping-the-Wheels-of-Trade-in-Motion)
- [Lagarde speech](http://www.imf.org/en/News/Articles/2016/09/27/AM16-SP09282016-Boosting-Growth-Adjusting-to-Change)
- [2016 Annual Meetings website](http://www.imf.org/external/am/2016/index.htm)
- [whole will be greater than the sum of the parts](https://blog-imfdirect.imf.org/2016/09/28/the-whole-can-be-greater-than-the-sum-of-its-parts/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2016/10/17/am16-na101716-globalization-and-growth-a-balancing-act-says-lipton_