IMF hails upswing in global economic activity

Washington: The International Monetary Fund has hailed the strength of the global economy at the close of the annual meetings of the World Bank Group and the IMF.

“The outlook is strengthening with a notable pickup in investment, trade and industrial production, together with rising confidence,” the IMF’s International Monetary and Financial Committee said in its final statement on Saturday, Efe news reported.

But “the recovery is not yet complete, with inflation below target in most advanced economies and potential growth remains weak in many countries”, the committee added.

Despite the cautiously optimistic wording of the statement, the mood at numerous meetings and conferences attended by economic leaders from around the world was almost festive, especially compared to previous years when a series of crises had put the global economy on the verge of collapse.

IMF Managing Director Christine Lagarde tried to dampen the enthusiasm surrounding forecasts for growth of 3.6 per cent this year and 3.7 per cent in 2018, which would be the highest levels since 2010, warning that the biggest risk is complacency.

Even German Finance Minister Wolfgang Schauble acknowledged at the end of a meeting of G20 colleagues that the atmosphere was more “relaxed and optimistic”.

Tensions between the IMF and the US administration headed by Donald Trump, who has argued against free-trade agreements he says are harmful to American workers, were not as high as on other occasions.

But even so US Treasury Secretary Steven Mnuchin called for deep reforms in the way the IMF and World Bank conduct their operations and demanded an end to the latter’s lending to China, the globe’s second-leading economy.

“As the IMF moves into the post-global financial crisis period, we urge the institution to structure its lending programs to prioritize reforms that drive private sector-led economic growth,” Mnuchin said.

“In too many countries a large public sector crowds out the private sector.”

That position by the US, the leading shareholder and contributor to the IMF and the World Bank, marks a 180-degree shift with respect to the policy of the previous administration headed by Barack Obama and has forced the rest of the international community to adapt to the changing reality.