Managing Director of the Bretton Woods Institution, Christine Lagarde has asked policy makers in Ghana and the developing world to make strenuous efforts at tackling deep-seated economic weaknesses.
She charged governments to show greater political leadership on infrastructure investment, trade agreements, and climate change.
Despite the boost from cheaper oil and stronger U.S. growth, the global economy is facing tough times
“We need a decisive push for structural reforms to boost current and potential growth over the medium term and that good teamwork and strong leadership will be critical, “she told the Council on Foreign Relations in Washington.
According to the IMF boss, this year should be an action year, noting that “ by that we mean removing deep-seated distortions in labor and product markets; revamping creaking infrastructures and building new ones; and pressing ahead with reforms in education, health, and social safety nets.”
“It also means unleashing the economic power of women,” She said infrastructure investment—where it is carefully chosen and efficient— is a potential game changer.
She noted that IMF research showed that increased public infrastructure investment raises output in the short term by boosting demand and in the long term by raising the economy’s productive capacity.
Lagarde said the global economy will face three major policy challenges that will require decisions based on political courage, decisive action, and truly multilateral thinking: boosting growth and employment; achieving more inclusive, shared growth; and attaining more sustainable, balanced growth.
She noted that these pivotal issues are deeply interconnected and mutually dependent
"All are important, all demand strong leadership, all require cooperation,” she stated
She said the drop in oil prices was a welcome shot in the arm that would boost consumers’ purchasing power in oil-importing countries, adding that the U.S. economy should strengthen further this year, largely due to more robust household spending.
“Too many countries are still weighed down by the legacies of the financial crisis, including high debt and high unemployment. Too many companies and households keep cutting back on investment and consumption today because they are concerned about low growth in the future,” she said
Lagarde said world growth is still too low, too brittle, and too lopsided, and stressed there are significant risks to a global economic recovery. These risks require a powerful policy mix that can strengthen the recovery and provide better employment perspectives for citizens worldwide, Lagarde stated
“Accommodative monetary policies remain essential and fiscal adjustment must be as growth- and job-friendly as possible. Above all, policymakers will need to finally step up structural reforms,” Lagarde said
Lagarde observed that the immediate test for many policymakers is the impact of lower oil prices, not so much for oil importers, for whom the windfall provides an opportunity to strengthen their macroeconomic frameworks and may help in alleviating inflation pressures.
Source: The Finder
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