World leaders set the final nail in the coffin of rapid economic growth

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World leaders set the final nail in the coffin of rapid economic growth

 24 October 2018 09:05 PM
Editing - سالي إسماعيل:

Mubasher: "The last nail in the coffin of accelerating global economic growth synchronized" set by the leaders of the world economy during their last meeting in Bali, according to an analytical view published by the agency "Bloomberg" of the expert, "Mohammed Al-Arian."

Finance ministers and central bankers met from about 190 countries in Bali during the annual meeting of the International Monetary Fund and the World Bank.

In a tone different from the optimism surrounding their April meeting, members of the International Monetary and Financial Committee (IFFC) identified many vulnerabilities.

They also cited a range of risks that tended to increase to the downside.

Although the International Monetary and Financial Committee has members with opposing views on free trade and currency and economy management, it has succeeded in reaching a compromise language for its joint statement at the end of their meetings over the weekend.

However, the Commission failed to formulate consolidated statements when it comes to policies, including agreeing on actions of importance and coordination to deal with the growing difference between developed economies.

In addition, steps are being taken to ensure that the final convergence translates into global economic growth and sustainable financial stability, in return for the risks of significant recession and unstable financial volatility .

Fears and risks

In the run-up to the meetings, the IMF published an update of the macroeconomic outlook, which points to somewhat less economic growth, despite the writer's over-optimism in many individual countries' expectations, with the exception of the United States, and more divergence among countries of systemic interest.

This was reflected in the final statement issued by the International Monetary and Financial Committee.

Officials said global economic growth remained strong despite acknowledging that the recovery was uneven among countries and some of the risks identified previously were partly visible.

The less optimistic outlook on the global economy comes in tandem with a long list of accumulated risks identified not only in the final statement but also in all public statements by officials in the most influential countries.

These risks included growing trade tensions, persistent geopolitical concerns, and tightening financial conditions that adversely affected many emerging economies.

It also includes uncertainty about policy and historically high debt levels, as well as increasing financial vulnerabilities and limited space for economic policy movements that could further undermine confidence and economic growth prospects.

General solutions

When it comes to introducing measures to contain these risks, the draft final statement has reached a general language such as "We will immediately deal with policy and reform progress to protect economic expansion, mitigate risk, rebuild policy and enhance resilience, Medium term for the benefit of all ".

More skillfully, they have struck a delicate balance between conflicting views on politics at the national level that have caused ongoing conflicts elsewhere.

"We recognize that the trade of goods and services and free, fair and mutually beneficial investment are key drivers of economic growth and job creation," the statement said.

On the current policy, they said: "We will avoid cutting competitive currencies and will not target exchange rates for competitive purposes."

The outcome of the meeting may have been viewed as more positive if the markets were not in a gradual transition from a liquidity-driven model by overwhelming majority to a more reflective of the key fundamentals.

This transformation has become more complex because of the differences between the different economies and trade in particular.

As such, the ICFC's message is insufficient to face the risk that this shift will be accompanied by another, more volatile and more dominant role in the financial markets .