Lift Tomorrow's Growth For Better Economic Future

Global recovery continues, but growth is moderate, uneven

Current global growth not enough to boost jobs and incomes, cut poverty

Lift today’s growth and tomorrow’s growth, and work together

Speaking at a news conference ahead of the 2015 IMF–World Bank Spring Meetings in Washington, she said a better economic future depended on lifting today’s growth, lifting tomorrow’s growth, and working together.

Lagarde noted that the IMF’s updated forecasts project the global economy to grow this year at 3.5 percent—about the same rate as last year—and to grow slightly faster at 3.8 percent next year.

“So the good news is that the global recovery continues. The not-so-good news is that growth remains moderate and uneven,” Lagarde told reporters. Participants at the Spring Meetings would be discussing how to prevent this “new mediocre” becoming the “new reality,” she stated.

“To get it good, it needs to get better,” Lagarde declared. Policymakers could start by lifting today’s growth, Lagarde said. Measures should include

• A package of demand-support policies that is tailored to specific situations and includes accommodative monetary policy where it is needed, tightening of monetary policy where it is possible, and smart fiscal policies;

• Addressing financial stability risks emanating from super-low interest rates, volatile commodity prices and exchange rates, and the potential rise in U.S. short-term interest rates; and

• Stronger financial policies to tackle financial risks that are rising and rotating—from advanced economies to emerging markets, from banks to the nonbank financial sector, and from sovereign solvency to market liquidity.

Lifting today’s growth is not enough, Lagarde stated. “We also need to lift the rate at which economies can grow over the medium term. Potential growth rates are going down, and this is in part because of changing demographics, lower productivity and, in some countries, the legacy of the crisis.”

Strong leadership

Reversing this trend means making serious structural reforms that encompass labor and product markets, infrastructure, trade, and investments in people. Implementing these reforms will call for strong leadership, Lagarde said.

Lagarde stressed that lifting today’s growth and tomorrow’s growth requires working together. International collaboration is also essential for making growth more sustainable and more inclusive.

“We need...