Cooperation Key to Secure Recovery, Say Expert Panelists

Global cooperation needed for growth

Balance of cutting and spending difficult task

Crisis will create changes in global financial system

Discussions on a range of topics, from growth and jobs to government spending, were hosted by the IMF as part of its Program of Seminars in Washington, D.C. on October 8.

IMF Managing Director Dominique Strauss-Kahn said countries had to respond to the crisis according to their own circumstances, and in the medium term fiscal consolidation was needed. But there was no point in economic growth if it does not provide people with a livelihood. Strauss-Kahn said the most important challenge right now was to restore jobs.

Governor Choongsoo Kim of the Central Bank of Korea identified two priority issues: “ways to achieve sustainable and balanced growth”—referring to the agreement between leaders of the Group of Twenty industrialized and emerging market economies in Pittsburgh in 2009—and “ways to prevent another crisis.”

The Program of Seminars provided a forum during the Annual Meetings for the private sector, government officials, civil society and staff from the IMF and World Bank to find solutions to the most pressing issues facing the global economy.

Coordinate globally, act locally

Reflecting on the role of growing economic linkages between economies in the crisis, IMF Special Advisor Min Zhu stressed that cooperation is the answer.

“Obviously this is a governance issue because if everybody is linked to each other, then we need everyone to take the same [policy] action … otherwise it won’t work.”

“The only solution of course is to have some sort of renewed spirit of cooperation, but we tend to speak globally, but act unilaterally,” said Guillermo Ortiz, former Governor of the Bank of Mexico.

Wary of the countries’ defensive policies given imbalances in the global economy, George Soros, another of the high profile panelists, was also skeptical.

“Countries unanimity was driven by fear, but the fear has dissipated and the differences of opinion have become sharper, and there is this debate of fiscal rectitude or the need for cyclical stimulus,” he said during the debate at the IMF on Global Economic Governance.

Stimulate or consolidate

The question of whether countries should stimulate their economies further or cut their budgets was debated by top names in economics and finance at the IMF’s BBC World Debate, Stimulate or Consolidate: How to Secure the Global Recovery, recorded on October...