The International Monetary Fund’s steering committee has urged member countries to boost “growth-friendly” spending to help deal with slowing global growth.
The IMF managing director, Christine Lagarde, said that calmer markets since February had reduced the stress level at the IMF and World Bank spring meetings, but the outlook was still fraught with downside risks from weak demand, a potential UK exit from the European Union and low oil and commodity prices.
“There was not exactly the same level of anxiety but I think there was an equal level of concern, and a collective endeavour to identify the solution and the responses to the global economic situation,” Lagarde said.
She described the gatherings, along with a G20 finance ministers and central bank governors meeting on Friday, as “collective therapy” to deal with the gloomy prospects. The IMF cut its global growth forecasts earlier this week for the fourth time in a year.
The IMF committee (IMFC) said in its statement: “Downside risks to the global economic outlook have increased since October, raising the possibility of a more generalised slowdown and a sudden pull-back of capital flows.”
Echoing sentiments from the G20 statement, the 24-member IMFC said countries should “refrain from all forms of protectionism and competitive devaluations, and to allow exchange rates to respond to changing fundamentals”.
The committee said a more “forceful and balanced policy mix” was needed to stimulate growth and avoid deflation and emphasised that monetary policy alone was not enough.