Global finance leaders are recently facing a shaky world economy and political attacks on free trade. They are looking for ways to increase cooperation to battle various economic threats during their meeting in Washington.
The International Monetary Fund (IMF) is encouraging countries to introduce a new round of public work projects that help improve roads and other types of infrastructures in the hopes of generating higher government spending to boost growth. But in the time of high deficits in budget, that call wasn’t met with strong support.
The discussions are part of the spring meetings of the 189-nation IMF and the World Bank, the sister lending organization. The leaders of both these institutions are giving cautions and warning about the need for greater efforts that will improve growth to ensure that the world economy won’t go back into recession.
The Group of 20, which represents the biggest economies in the world, recently wrapped up two-days of talks last Friday with Jacob Lew, the Treasury Secretary, and Janet Yellen, the Federal Reserve Chair, representing the United States. Meanwhile, meetings of the policy-setting panels of the IMF and World Bank were held last Saturday.
Mr. Lew met with his counterparts from Japan and China on Thursday. In a statement, the US side said that both Lew and Chinese Finance Minister Lou Jiwei discussed about the importance of China going towards a market-determined exchanged rate in an orderly and transparent manner, while communicating their policies and actions to the market clearly.
Take note that the government of China has roiled markets in August and January with actions that caused great concerns that the second largest economy of the world was slowing rapidly than predicted, a development that worried the economic fallout on other nations.
During the opening news conferences on Thursday, Christine Lagarde, the IMF Managing Director, and Jim Yong Kim, the President of the World Bank, emphasized the need for stronger policies that would help fight the growing risks. They both sought to address the political attacks on globalization, which helped propel the presidential campaign of Donald Trump in the US and triggered an upcoming election on whether or not Britain should exit the European Union.
Lagarde and KIim both agree that the answer to stagnant wages in a number of industrial nations and complaints of job loss to trade competition was to pursue policies that are growth-oriented, like boosting government infrastructure spending.