IMF Member Nations Warned of Global Economic Risks

IMF Member Nations Warned of Global Economic Risks

In Washington, a news conference was held at the IMF Headquarters in Washington at which Christine Lagarde, the Committee’s Managing Director, addressed the issue of global financial and economic risks. IMF’s member countries postulated that stern action was required for global economic recovery and governments were asked not to cut down on growth by tightening budgets.

IMF’s steering committee expressed its concern about prioritizing growth in the wake of Japan’s and China’s fluctuating economy crisis and with Europe under the threat of recession. The IMF said that a lot of countries today are under the impending danger of slow and stagnant growth, the unemployment factor being considerably high. Despite the heavy inflow of cash by the central banks, efforts to replenish the state of the global economy have not proved fruitful.

The global growth forecast by the IMF was cut to 3.3 percent from 3.4 percent, proving to be the third reduction this year. The condition of Europe’s economy was the major and shared concern among policymakers as well as major economists at the conference. Although Germany’s finance minister Wolfgang Schaeuble suggested that the situation isn’t as worse as being projected, Mario Draghi, the European Central Bank president, expressed his concern on the same issue.

The topic of fiscal policy flexibility was also called for by the IMF Committee. However, the efforts to allow France to meet the Europe Union deficit target appeared inconsequential on the German representative’s insistence that the agreement on fiscal rectitude was set in stone.

Amid this particular threat, the United States Economy seems to have recovered from the crisis it suffered years ago, and investors, as a result, have been investing in dollars. However, the theory that the global economic slowdown will also eat its way into the States’ economy is not completely ruled out. Fed Governor Daniel Tarullo expressed his discontentment on the world growth, stating that it had more downside than upside risks.

The Committee, taking all important factors into consideration, asked the 188 member countries to carry out rigid measures to ensure regular liquid inflow through the smooth running of labor markets so as to create enough growth and job opportunities.

The committee also asked the major central banks to effectively communicate any changes in their policies in an effort to minimize and obliterate financial market shocks. The warning was probably targeted at the Fed, the next step of which is to raise interest rates sometime around mid-2015.



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