The IMF has recognized the failure of the G20 to accelerate the world economy


Ahead of the meeting of the leaders of the twenty leading economies, which will be held September 4-5 in Chinese Hangzhou, the international monetary Fund has recognized the failure that they have begun two years earlier, working to increase global GDP and called to take “resolute” measures to prevent the global economy in the trap of slow growth.”

The ambitious goal set at the G20 meeting in Brisbane two years ago to increase the total GDP of G20 countries by 2% by 2018 (in real terms — by $2 trillion), now looks impossible, it follows from the analytical report of the IMF, the summit in Hangzhou. Now the IMF recognizes that in the case of implementation of all measures planned two years ago, the GDP of the G20 countries will grow by 2018, only 1% (max 1.5%). According to estimates of the organization, was made only 55% of the commitments made by the leaders of twenty in Brisbane in 2014, and 45% of commitments they adopted a year later in Antalya, Turkey.

According to the findings of the Fund, the problems of the world economy over the two years remains the same — then, in February 2014, before the summit “the financial twenty” in Sydney, the IMF was called the pace of global economic recovery “disappointing” and pointed to GDP growth in some G20 countries below expectations. The main reason for the low level of economic growth is “lack of structural reforms and public investment”, said in a note to the IMF. The lack of decisive action in politics, as the IMF notes, has also led to a slowdown in international trade — in 2012-2015, according to the Fund, imports of goods and services in most countries slowed down.

Commenting on the Fund, IMF chief Christine Lagarde urged world leaders to take decisive action to prevent the world economy in a trap of slow growth.” They should do much more to boost demand, boost trade and globalization, and the fight against inequality, Lagarde said in an interview with Reuters on Thursday, September 1. Otherwise, the growth rate of the world GDP and more can be unsatisfactory, the speakers official blog Lagarde, published on Thursday, September 1. According to IMF forecasts, in 2016 global GDP growth for the fifth consecutive year will be below the longer term average of 3%, and in 2017 it may well be the sixth in this series, said the head of the Fund.

Lagarde also lowered the forecast for growth in global GDP in 2016 is likely to be degraded, since the Fund receives a “not very good signals on macroeconomic statistics. If the decline occurs, it will be the sixth in a row for the last half year (now, the IMF predicts global GDP growth of 3.1% in 2016 and 3.4% in 2017). The last time the Fund lowered its estimate in July. At the same time, the IMF notes that about 60% of the expected GDP growth of twenty by 2018 will be achieved through the efforts of the emerging markets, which account for more than half of GDP of the G20.

Continuing significant and prolonged slowdown in the global economy — the first since the early 1990-ies, when the growth of global GDP was hampered by the transition of some countries to a market economy, it follows from column Lagarde. In developed economies real growth by almost a full percentage point behind the average level 1990-2007. This resulted in a series of negative factors, in both developed and developing economies, says Lagarde. In developed economies real growth by almost one percent less than the average level of 1990-2007. This is due to three key reasons. First, many countries still have not overcome crisis tendencies, in particular excessive levels of debt in the private and public sectors and the worsening balance sheets of financial institutions. These factors hamper the growth of demand. Second, weak demand restrains trade, exacerbating the problem of insufficient productivity growth. Third, the slowdown in productivity growth and unfavorable demographic trends have a negative impact on potential growth.

The growth rates of emerging economies also slowed down, returning to historic norms after high levels of the past decade, according to the column. This trend, the IMF communicates, first, with the reorientation of China’s economy from investment to consumption and from external toward internal demand. This transition process is costly for trading partners of China, depending on the demand for exports in China, and can cause bouts of financial volatility. Secondly, it is due to a significant decline in commodity prices, which adversely affected the disposable income of many commodity exporters.

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