Global Economic Growth at Peak says IMF
Global economic growth is at risk of peaking because of high oil prices and rising protectionist sentiment, warned Rodrigo de Rato, the International Monetary Fund’s managing director, on Tuesday.
“The global growth cycle may be close to its peak,” Mr de Rato said in his opening statement at the joint IMF and World Bank plenary session in Singapore.
“The best hope for continued high growth lies in further increases to international trade. If this does not happen, the outlook is less encouraging.”
» Source: Financial Times
Mr de Rato also warned of a continued risk that current account imbalances will unwind in a disorderly way.
“There is a growing risk that protectionist sentiment will overwhelm good sense. If it does, all of the other risks loom larger.”
The IMF chief urged developed and emerging countries to renew their commitment to multilateralism and resume the stalled Doha round of world trade talks.
“The best hope for continued high growth lies in further increases in international trade … The suspension of the Doha Round talks is deeply disappointing and damaging,” he said.
“It delays an agreement that would raise prosperity and support growth around the world, and it feeds a growing inclination towards, at best, bilateralism and, at worst, protectionism.”
Mr de Rato’s statement came as the IMF approved a proposal to provide additional voting power immediately to China, South Korea, Mexico and Turkey and start a fundamental reform of the world body.
The reform was approved on Monday with 90.6 per cent of votes from member countries and was supported by all the fund’s large shareholders.
The reform aims to balance IMF voting power in accordance with each country’s economic weight in the world and launches a review of the underlying formula for calculating votes with a view to a more extensive overhaul within two years.
Support was in excess of the 85 per cent needed, with only 23 countries out of 182 IMF members voting against. Although they include Brazil and India, the dissenting countries could not have secured a blocking minority even if each IMF member had one vote.
Many of the dissenting countries were from Latin America or the Middle East.
