19 July 2019
IMF managing director Christine Lagarde said the world economy has been so weak for such a long time. Photo: Bloomberg
IMF managing director Christine Lagarde said the world economy has been so weak for such a long time. Photo: Bloomberg

IMF urges G20 to take ‘forceful’ action to revive global economy

The head of the International Monetary Fund has called on global leaders to take “forceful” action to revive the world economy.

IMF managing director Christine Lagarde said that as of 2016, global economic growth had stagnated for five years below the 3.7 percent average that prevailed between 1990 and 2007, Agence France-Presse reports.

“Not since the early 1990s … has the world economy been so weak for such a long time,” Lagarde said in a statement issued to coincide with the start of the G20 summit in Hangzhou, China on Sunday.

Lagarde warned of a “low-growth trap” – high debt, weak demand, eroding work forces and labor skills, weakening incentives for investment and slowing productivity.

She said the world’s economies faced a potentially toxic mix of low long-term growth and rising inequality, which could encourage politicians to lean towards populism and raise trade barriers.

But analysts say the G20 summit is unlikely to achieve a breakthrough, given that it occurs in the absence of a crisis which could prod governments to take action.

Member states are too preoccupied with different issues, such as Britain exiting the European Union, Japan considering more easing, Germany skeptical of stimulus and China pressed on its industrial overcapacity, AFP said, citing the analysts.

“At the moment there’s simply not a lot of common overlapping interests between the major economies,” Christopher Balding, professor of economics at Peking University HSBC Business School, told the news agency.

In a report on global economic conditions for G20 members, IMF economists said US growth would likely be weaker than previously expected in 2016.

The report’s chief author, IMF economist Helge Berger, told reporters in Washington the organization expected in October to downgrade its US growth forecast in light of the poor performance seen in the first half of this year.

In July, the IMF said it expected the US economy to grow at 2.2 percent this year and 2.5 percent in 2017.

Those figures were already downward revisions from the IMF’s forecast in April.

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