IMF urges largest economies to be prepared to engage in coordinated policy action

| | Washington
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IMF urges largest economies to be prepared to engage in coordinated policy action

Thursday, 17 October 2019 | PTI | Washington

The IMF on Wednesday urged the largest economies of the world, including India, to be prepared to engage in a coordinated policy action, a day after it downgraded the 2019 global growth rate to 3 per cent — the slowest pace since the 2008 global financial crisis.

The remarks by Vitor Gaspar, Director of the International Monetary Fund’s Fiscal Affairs Department, came a day after the IMF painted a grim picture of the global economy.

“It is timely for the largest economies to be prepared to engage in a coordinated policy action if downside risks to the global economic growth materialise,” Gaspar told PTI in an interview.

“More explicitly, in case there is a severe slowdown in the global economy, we need to be ready to work together, to face it and solve it,” he said.

Responding to a question, he said that his example of successful international cooperation is what the G-20 agreed to back in 2008. “India was part of that process. India should be a part of a similar process today,” he said.

“I’ve been very impressed by the performance of the Indian economy in the last generation. Growth in India is strong. India must continue its process of reform and transformation to be able to sustain growth as it has done in the past,” he said.

Noting that in a large number of advanced economies, they have very low interest rates, he said many of those economies have zero or negative nominal interest rates.

“Inflation in some of these countries is below target and inflation expectations are drifting down. So, our recommendation is that economies that benefit from these low or negative interest rates and have fiscal space should use it now to invest,” he said.

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