Finance ministers: Economy stronger but fragile
WASHINGTON (AP) — The world’s top financial officials say they believe the global economy is strengthening but that growth remains fragile and open to risks of new geopolitical strife, as in Ukraine.
Rich countries have been helping power the recovery led by the United States and Britain, and the eurozone and Japan are doing better. However, there has been some slowing in major emerging markets such as China even though these economies have been powering along at growth rates ahead of developed nations. Many countries still are experiencing painfully high unemployment rates with millions looking for work.
The conclusion of discussions Saturday at the International Monetary Fund and its sister institution the World Bank ended three days of talks that began with meetings by finance ministers of the Group of 20 nations, the mix of traditional economic powers such as the United States, Japan and Germany and emerging economies such as Brazil, India and China.
“Creating a more dynamic, sustainable and job-rich global economy remains our paramount collective goal,” the policy-setting panel of the 188-nation IMF said in a closing communique.
IMF Managing Director Christine Lagarde and the finance ministers who sit on this panel said they believed the world had entered a new phase with stronger growth that will begin to make inroads on unemployment.
Referring to the years 2008 through 2010 as an economic disaster, Lagarde said at a closing news conference that now “we are moving into a strengthening phase.”
The latest IMF economic forecast has the world economy growing 3.6 percent this year and 3.9 percent in 2015.
The finance ministers acknowledged a number of threats to their forecast, ranging from periodic stock market jitters as investors worry the Federal Reserve may mishandle its efforts to gradually end the bond buying it has used to lower long-term interest rates to concerns that the political standoff over Russia’s annexation of the Crimean Peninsula could undermine market confidence.
On Ukraine, the finance ministers endorsed the IMF package of $14 billion to $18 billion in loans to help the country avoid a financial meltdown. France and other European finance ministers urged a go-slow approach to imposing additional economic sanctions on Russia
The United States had hoped for stronger efforts to discourager Russia from more action in Ukraine. But European nations, with closer economic ties with Russia, said diplomacy should be given more time to work.
The United States came in for some criticism with officials saying in their statement they were “deeply disappointed” with the continued delay in congressional approval of legislation to provide expanded loan capacity to the IMF to help countries in difficulty.
The IMF said that if Congress fails to pass the measure by the end of the year it would explore other options. Officials said those options could weaken America’s ability to influence the global economy and lead to a more fragmented world.
At the World Bank’s closing news conference following a meeting of its steering committee, its president, Jim Yong Kim, said he was encouraged by the strong support he had received from the panel for his efforts to make the bank, the largest single provider of development assistance, more efficient.