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Ahead of the annual meetings—which bring together more than 10,000 participants, including members of civil society and the private sector—the IMF released a gloomier picture of the global economy, saying it had marked down global growth to 3.3 per cent this year and a still sluggish 3.6 per cent in 2013.
Lagarde outlined three milestones on the road forward.
• getting beyond the crisis and restoring growth;
• completing reform of the financial sector; and
• addressing inequality and building inclusive growth.
In bringing an end to the crisis, the first priority would be to restore growth. “Without growth, the future of the global economy is in jeopardy”, she said. Restoring growth would be essential to address the huge legacy of public debt—now averaging almost 110 per cent of GDP for the advanced economies.
She said it was urgent to complete the agenda for financial sector reform “to move beyond the system that gave us the crisis”. At the same time, Lagarde expressed concern that reform momentum is waning, calling for action on better regulation, better supervision, better resolution of cross-border entities, and better internal incentives in financial institutions.
But, rejecting “unfettered globalisation”, she told delegates growth must be inclusive and benefit all, pointing to IMF research that shows less inequality is linked to greater macro-economic stability and more sustainable growth. She said this had profound policy implications.
“It means focusing on efficiency but also keeping equity in mind when setting fiscal policy. It means fairness in sharing the burden of adjustment, and protecting the weak and vulnerable. It means better financial inclusion, so that all have access to credit and financial markets. It means better transparency and governance, so that the doors of opportunity are open to all—and if they close, one knows why”, Lagarde stated.