Global finance chiefs optimistic about economic outlook

Members of the International Monetary and Financial Committee posing for a group photo at the start of their meeting at the IMF headquarters in Washington last Saturday, during the spring meetings of the IMF and World Bank.
Members of the International Monetary and Financial Committee posing for a group photo at the start of their meeting at the IMF headquarters in Washington last Saturday, during the spring meetings of the IMF and World Bank.PHOTO: EPA-EFE

WASHINGTON • Global finance chiefs ended talks in Washington, mixing concern about the current state of the world economy with confidence that it will soon rebound.

The shift away from tighter monetary policy by central banks, recent stimulus in China and easing trade tensions were hailed as reasons to hope the slowdown will prove short-lived, although nobody forecast a renewed boom.

With stocks already rallying on optimism about the outlook, officials at the International Monetary Fund's (IMF) spring meetings said growth is set to "firm up".

IMF managing director Christine Lagarde nevertheless warned that the world is at a "delicate moment" and at risk of "self-inflicted wounds".

World Bank chief economist Pinelopi Koujianou Goldberg said in an interview: "It is a time that is characterised by very high uncertainty. It is not a time where people are bullish about the global economy. People don't feel that we are in a major crisis either."

The IMF cut its forecast for global expansion to the slowest pace since the financial crisis a decade ago, but played down the risk of recession and predicted growth will pick up in the second half of the year to stabilise at about 3.6 per cent next year.

That would be an improvement over the 3.3 per cent pace projected for this year, but below the 3.8 per cent of 2017.

 
 
 
 

United States Treasury Secretary Steven Mnuchin stoked optimism by saying that he was hopeful the US and China are "close to the final round" of trade talks.

British Chancellor of the Exchequer Philip Hammond said the government and the main opposition party could strike a Brexit deal within weeks.

Europe's struggles again emerged as a source of worry, leaving Germany under pressure to ease fiscal policy and Britain to arrange its withdrawal from the European Union.

Still, European Central Bank president Mario Draghi was cautiously optimistic in arguing the euro area has shown "remarkable resilience".

US President Donald Trump's bashing of the Federal Reserve - which he renewed with a tweet on Sunday claiming stocks would be much higher had it not been for its actions - had policymakers circling the wagons in defence of central-bank independence.

Former Treasury official David Malpass turned over a new leaf as new president of the World Bank. Inside Mr Trump's Treasury, he questioned whether international cooperation had gone too far and took issue with China's borrowing.

But since taking the helm of the development lender, Mr Malpass has adopted a more conciliatory tone. He said he is not planning a restructuring at the bank, and pledged to work constructively with China. "China has been hugely successful at reducing extreme poverty. China has some lessons to share."

Over at the IMF, governments did not show appetite for increasing its capital. While the lender's main advisory panel noted the importance of an "adequately resourced" IMF, it said final decisions will be left to meetings in October.

A version of this article appeared in the print edition of The Straits Times on April 16, 2019, with the headline 'Global finance chiefs optimistic about economic outlook'. Print Edition | Subscribe