IMF Call to Work Together for Growth, Jobs, Financial Sector Reform

Working together is “win-win process” in which everyone can be better off

Countries need to think about new sources of growth

Multilateral institutions should reflect changes in world economy

Addressing the opening session of the 2010 IMF-World Bank Annual Meetings in Washington DC, Strauss-Kahn said countries also need to focus on restoring fiscal sustainability, promoting job-creating growth, and completing reform of the financial sector.

“If you want to restore confidence in an uncertain world, you need to work together. If you want to put people back to work, you need to work together. If you want to build a better and safer world for our children and grandchildren, you need to work together. And this Annual Meetings is certainly the place to do so,” Strauss-Kahn declared.

Amid the much more extensive linkages between the world’s economies, working together is a win-win process in which, with the right policies, everyone can be better off, Strauss-Kahn stated.

At the global level, recovery has arrived, but it is fragile because it is uneven, he noted. Recovery is going well in Asia and South America, and growth is rising in the countries of sub-Saharan Africa faster than in past recoveries. But in Europe and the United States, recovery is sluggish and subdued.

Risks to recovery

Strauss-Kahn said the IMF did not expect a “double-dip” return to world recession. But he specified four downside risks to the recovery.

• Public debt. Countries should aim to return to fiscal sustainability over the medium term, while using available fiscal space to boost growth in the short term.

• Jobless recovery. Growth may not be enough if it is growth without jobs. Countries should promote sustainable growth that creates jobs.

• Change in the financial sector. Financial regulation needs to be supplemented by better supervision and a crisis resolution mechanism. The best rules, if not supervised, will achieve nothing.

• Diminishing commitment to cooperation. The world avoided a crisis as big as the Great Depression by working together, but now the commitment to cooperation needs to be invigorated.

New sources of growth

Strauss-Kahn said the world’s growth model after the global financial crisis will not be the same as the growth model before the crisis. “We need to think about new sources of growth, including green growth. It means that we have to think more about rebalancing the structure of growth between the private part of growth and the...