A Speech by IMF Managing Director Christine Lagarde
Harvard University
Larry, thank you for that generous introduction. Dean Elmendorf, Nick, thank you for welcoming me back to Harvard.", "publishDate": "2017-10-05", "sections": [ { "heading": "Introduction", "content": "- Speech by IMF Managing Director Christine Lagarde at Harvard University, October 5, 2017.\n- Central question: \"Can the world seize the opportunity of the upswing to secure the recovery and create a more inclusive economy that works for all?\"\n- Framing metaphor: President Kennedy — \"the time to repair the roof is when the sun is shining.\"" }, { "heading": "Is the Sun Starting to Break Through?", "content": "Findings on the cyclical outlook\n- IMF projected 3.5 percent global growth for 2017 and 3.6 percent for 2018 (July projection); an updated forecast to be released next week is expected to be more optimistic.\n- Measured by GDP, nearly 75 percent of the world is experiencing an upswing — the broadest-based acceleration since the start of the decade.\n- Last year 47 countries experienced negative GDP growth per capita.\n- Positive contributors:\n - Cyclical pickup in investment and trade in advanced economies, especially Europe and Japan.\n - Asian emerging markets led by China and India remained strong.\n - Outlook brighter for some commodity exporters in Sub-Saharan Africa and Latin America.\n - Globally, financial stability is improving due to a more stable banking system and increased market confidence.\n- Risks and threats:\n - High levels of debt in many countries.\n - Rapid credit expansion in China.\n - Excessive risk-taking in financial markets.\n - Heightened non-economic challenges: weather-related disasters (Caribbean, US, Asia) and geopolitical tensions (Korean peninsula).\n- Policy choice:\n - Option 1: Delay reforms until the next crisis (politically easier but risky).\n - Option 2: Use the recovery to implement reforms now — IMF research suggests reforms are more potent and easier to implement when economies are healthier." }, { "heading": "The Tools We Need to Repair the Roof", "content": "Fundamentals and macro policy\n- Inflation is still low and subdued despite near-full employment in many advanced economies; monetary policy should continue to support the recovery.\n- Central banks should:\n - Communicate plans clearly.\n - Execute monetary policy normalization smoothly, as appropriate in each country, to avoid market turbulence and sudden tightening.\n- Fiscal policy guidance:\n - Countries with healthier public finances (example cited: Germany and South Korea) can invest more in their economies.\n - Countries with high public debt should use growth to reduce debt relative to GDP and strengthen resilience.\n - Containing public debt is imperative in many lower income countries where debt levels have risen markedly.\n - Reducing excessive global imbalances—investing more where fiscal positions are healthy and lowering deficits elsewhere—can support growth and avoid financial and exchange rate instability.\n- Structural reforms are essential alongside monetary and fiscal policies.\n\nLifting incomes and creating jobs\n- Productivity concern:\n - In the largest economies, overall productivity growth has dropped to 0.3 percent, down from a pre-crisis average of about 1 percent.\n- Policy levers to boost productivity and wages:\n - Cut red tape.\n - Increase spending on research and development.\n - Invest in infrastructure.\n - Increase demand where wages are limited by weak demand (high unemployment or involuntary part-time employment).\n- Labor market reforms and examples:\n - Spain: greater workplace flexibility for employers and employees.\n - Mexico: revised rules to allow young people to more easily enter the formal job market and gain access to health care and other benefits.\n - Japan: childcare leave benefits expanded from 50 percent to 67 percent of salary as part of efforts to get over 1 million women into the workforce.\n- Economic gains from empowering women:\n - If women participated in the labor force in the same numbers as men, GDP could increase by as much as 5 percent in the US, 27 percent in India, and 34 percent in Egypt.\n\nInvesting in people’s futures and fostering inclusive growth\n- Global and within-country inequality:\n - Over the past three decades, inequality between countries has declined sharply (rise of emerging markets such as China and India).\n - Within some advanced economies, inequality has widened and wealth has concentrated among top earners.\n - IMF research: excessive inequality hinders growth and erodes social trust.\n- Policies and examples to reduce inequality and invest in human capital:\n - India: expanded health care access with clear benefits for the poorest citizens.\n - South Korea: bonuses to encourage teachers to work in underperforming schools.\n - US: efforts to increase the number of women studying STEM.\n - Germany: apprenticeship program as a long-standing model for skills development.\n - Canada: on-the-job skills training showing effectiveness relative to classroom learning.\n- Preparing for the future of work:\n - Automation risks exacerbating inequality as owners of technology gain efficiency while lower-skilled workers may lose jobs.\n - IMF exploring a range of options from universal basic income to more progressive taxation.\n - Historical tax context: in 1981, the average top marginal tax rate in advanced economies was 62 percent; in 2015, it was 35 percent.\n - New IMF research (to be released next week from the speech date) suggests some advanced economies could raise top tax rates without slowing growth." }, { "heading": "The Benefits of Cooperation", "content": "- Many challenges require global solutions:\n - Corruption: IMF committed to do more to help members; bribery alone costs more than 1.5 trillion dollars per year, nearly two percent of global GDP.\n - Embezzlement, corporate income tax evasion, money laundering, terrorist financing — all have cross-border dimensions.\n- Financial regulation:\n - Progress since the crisis (Financial Stability Board and others) on higher bank capital and liquidity.\n - Need to protect progress and review implementation where beneficial.\n- Trade:\n - Over the last thirty years, trade raised global growth and lifted hundreds of millions out of poverty.\n - Some groups have been negatively impacted; protectionism is counter-productive, but improvements in transparency and distributional outcomes are warranted.\n- Climate change:\n - Estimates suggest a 1 degree Celsius increase in a country with an average annual temperature of 25 degrees — such as Bangladesh — could reduce per capita GDP by nearly 1.5 percent.\n - International cooperation is necessary to address man-made causes of global warming.\n- Role of the IMF:\n - Serve as a platform for dialogue and a resource for countries seeking to build more resilient economies.\n - The IMF is a critical part of the toolkit as representatives from 189 member nations convene for the Annual Meetings." }, { "heading": "Conclusion", "content": "- Call to action: Use the current upswing to repair economic \"roof\" now — invest, reform, and cooperate while the recovery strengthens.\n- Inspirational closing: Alexis de Tocqueville — \"What is not yet done is only what we have not yet attempted to do.\" and President Kennedy’s admonition to repair the roof when the sun is shining.\n- Closing line: \"Thank you very much.\"\n\nSource: \"A Time to Repair the Roof,\" Speech by IMF Managing Director Christine Lagarde, Harvard University, October 5, 2017.\n\n---\n\n Content in this bundle\n\n- Full Report (PDF){rel=\"external\" type=\"application/pdf\"}\n- The Role of the Fund in Governance Issues—Review of the Guidance Note\n - The Role of the Fund in Governance Issues—Review of the Guidance Note (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - The Role of the Fund in Governance Issues—Review of the Guidance Note (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- Christine Lagarde\n- People's Republic of China and the IMF\n- Bangladesh and the IMF\n- Germany and the IMF\n- India and the IMF\n- Japan and the IMF\n- Republic of Korea and the IMF\n- Speeches\n- PRESS CENTER\n- World Economic Outlook (Washington: September 2017), Chapter 2.\n- Women, Work, and the Economy: Macroeconomic Gains from Gender\nEquity\n- October 2017 Fiscal Monitor\n- Corruption: Costs and Mitigating Strategies\n- World Economic Outlook (Washington: September 2017), Chapter 3\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2017/10/04/sp100517-a-time-to-repair-the-roof" } ], "bullets": [ "[Markdown version](/en/news/articles/2017/10/04/sp100517-a-time-to-repair-the-roof/index.md)", "[Structured JSON version](/en/news/articles/2017/10/04/sp100517-a-time-to-repair-the-roof/index.json)", "[Bundle manifest](/en/news/articles/2017/10/04/sp100517-a-time-to-repair-the-roof/bundle-manifest.json)", "Published: October 5, 2017", "Speech by IMF Managing Director Christine Lagarde at Harvard University, October 5, 2017.", "Central question: \"Can the world seize the opportunity of the upswing to secure the recovery and create a more inclusive economy that works for all?\"", "Framing metaphor: President Kennedy — \"the time to repair the roof is when the sun is shining.\"", "IMF projected 3.5 percent global growth for 2017 and 3.6 percent for 2018 (July projection); an updated forecast to be released next week is expected to be more optimistic.", "Measured by GDP, nearly 75 percent of the world is experiencing an upswing — the broadest-based acceleration since the start of the decade.", "Last year 47 countries experienced negative GDP growth per capita.", "Positive contributors:", "Risks and threats:", "Policy choice:", "Inflation is still low and subdued despite near-full employment in many advanced economies; monetary policy should continue to support the recovery.", "Central banks should:", "Fiscal policy guidance:", "Structural reforms are essential alongside monetary and fiscal policies.", "Productivity concern:", "Policy levers to boost productivity and wages:", "Labor market reforms and examples:", "Economic gains from empowering women:", "Global and within-country inequality:", "Policies and examples to reduce inequality and invest in human capital:", "Preparing for the future of work:", "Many challenges require global solutions:", "Financial regulation:", "Trade:", "Climate change:", "Role of the IMF:", "Call to action: Use the current upswing to repair economic \"roof\" now — invest, reform, and cooperate while the recovery strengthens.", "Inspirational closing: Alexis de Tocqueville — \"What is not yet done is only what we have not yet attempted to do.\" and President Kennedy’s admonition to repair the roof when the sun is shining.", "Closing line: \"Thank you very much.\"", "[Full Report (PDF)](/external/pubs/ft/weo/2016/01/pdf/text.pdf){rel=\"external\" type=\"application/pdf\"}", "**The Role of the Fund in Governance Issues—Review of the Guidance Note**", "[Christine Lagarde](https://www.imf.org/en/About/senior-officials/Bios/christine-lagarde)", "[People's Republic of China and the IMF](http://www.imf.org/external/country/CHN/index.htm)", "[Bangladesh and the IMF](http://www.imf.org/external/country/BGD/index.htm)", "[Germany and the IMF](http://www.imf.org/external/country/DEU/index.htm)", "[India and the IMF](http://www.imf.org/external/country/IND/index.htm)", "[Japan and the IMF](http://www.imf.org/external/country/JPN/index.htm)", "[Republic of Korea and the IMF](http://www.imf.org/external/country/KOR/index.htm)", "[Speeches](https://www.imf.org/en/news/searchnews)", "[PRESS CENTER](http://presscenter.imf.org/)", "[World Economic Outlook (Washington: September 2017), Chapter 2.](https://www.imf.org/en/Publications/WEO/Issues/2017/09/19/world-economic-outlook-october-2017%202)", "[Women, Work, and the Economy: Macroeconomic Gains from Gender", "[October 2017 Fiscal Monitor](http://www.imf.org/en/publications/fm/issues/2017/10/05/fiscal-monitor-october-2017)", "[Corruption: Costs and Mitigating Strategies](https://www.imf.org/en/Publications/Staff-Discussion-Notes/Issues/2016/12/31/Corruption-Costs-and-Mitigating-Strategies-43888)", "[World Economic Outlook (Washington: September 2017), Chapter 3](https://www.imf.org/en/Publications/WEO/Issues/2017/09/19/world-economic-outlook-october-2017%203)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "related": [ { "title": "Full Report", "role": "full-report", "sourceUrl": "http://www.imf.org/external/pubs/ft/weo/2016/01/pdf/text.pdf", "binary": { "path": "/external/pubs/ft/weo/2016/01/pdf/text.pdf", "mime": "application/pdf" } }, { "title": "The Role of the Fund in Governance Issues—Review of the Guidance Note", "role": "paper", "sourceUrl": "https://www.imf.org/-/media/files/publications/pp/2017/pp080217-the-role-of-the-fund-in-governance-issues-review-of-the-guidance-note.pdf", "summary": { "path": "/-/media/files/publications/pp/2017/pp080217-the-role-of-the-fund-in-governance-issues-review-of-the-guidance-note.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/pp/2017/pp080217-the-role-of-the-fund-in-governance-issues-review-of-the-guidance-note.pdf", "mime": "application/pdf" } } ], "alternates": { "markdown": "/en/news/articles/2017/10/04/sp100517-a-time-to-repair-the-roof/index.md", "json": "/en/news/articles/2017/10/04/sp100517-a-time-to-repair-the-roof/index.json", "bundleManifest": "/en/news/articles/2017/10/04/sp100517-a-time-to-repair-the-roof/bundle-manifest.json" }, "generatedAtUtc": "2026-09-25T21:14:59.613Z" }