The outlook for the global economy is ‘darker’: the economy has weakened as downside risks materialize and looking ahead the challenges are ‘immense’. The International Monetary Fund presents the G20 with a more difficult picture than it did a month ago when it presented the World Economic Outlook. Since then, economic indicators have continued to weaken. “An increasing proportion of G20 countries have moved from expansion territory earlier in the year to levels signaling contraction,” said Tryggvi Gudmundsoson, an economist at the Washington Institute. Despite signs of a slowdown, it is necessary – the fund urges – to continue to prioritize curbing inflation “as well as addressing high levels of debt while protecting the most vulnerable”. The IMF reiterates that fiscal policy must not run counter to monetary policy objectives and stresses the need for more ambitious medium-term debt reduction plans in several G20 economies, including Italy. “More ambitious deleveraging plans are desirable in various economies over the medium term to replenish fiscal buffers (e.g. India, France, Italy, Japan, South Africa and Spain),” the fund explains, emphasizing how “the combination of tighter fiscal policy and structural reforms would serve to significantly reduce government debt burdens over the medium term (India, Italy, South Africa and Spain)”. “In a context of a weak global economy, structural reforms that support growth can help boost economic activity today and increase growth potential in the medium term” , the IMF adds, noting that market reforms in France, Germany and Italy would work to facilitate the reskilling of workers.The Fund therefore highlights how strengthening trade and public investment policies can help prevent fragmentation and that to promote growth. “Streamlining and improving public investment processes can boost green investment, accelerate the green transition and support growth. Useful measures in this regard include reducing administrative and legal barriers, improving coordination between different levels of government, addressing labor and material shortages (e.g. Germany) and increasing transparency (e.g. Italy)”, the IMF specifies and calls for calls on the G20 to take joint action for a “strong, balanced and inclusive recovery”. The challenges facing the global economy are “immense, and the weakening of economic indicators points to further difficulties ahead. In any case – according to Gudmundsson – with careful political action and joint multilateral efforts, the world can achieve stronger and more inclusive growth strive”
REPRODUCTION RESERVED © Copyright ANSA
]]>
Get the embed code
]]>