As G-20 Finance Ministers and Central Bank Governors gather in Paris this weekend, their meeting—the first ministerial level meeting of France’s G-20 presidency—comes at a critical juncture, critical for the global economy, with tensions and risks emerging that require strong policy responses, and critical for ensuring actions on international policy cooperation and reform. So, with all eyes turning to Paris, here is some recommended reading for G-20 watchers.
The international monetary system is a topic that encompasses a wide range of issues—reserve currencies, exchange rates, capital flows, and the global financial safety net, to name a few. Some are of the view that the current system works well enough. I take a less sanguine view. Certainly the world did not end with the crisis that began in 2008 and a recovery is under way. But, it is not the recovery we wanted—it is uneven, unemployment is not really going down, there are widening inequalities, and global imbalances are back. Reform of the international monetary system may be wide-ranging and complex. But concrete reforms are needed to achieve the kind of well-balanced and sustainable recovery that the world needs, and to help prevent the next crisis.
Europe’s sovereign debt crisis, fiscal challenges in advanced economies, concerns about overheating in emerging market countries, and the impact of rising food prices. These are the hot topics at this year’s World Economic Forum in Davos, Switzerland, and a clear sign of the tensions and risks as the global economy recovers. In an interview from Davos, the IMF’s First Deputy Managing Director John Lipsky tells us that, with the return of global growth, the mood is certainly more optimistic than it was a year or two ago. But there is also a clear sense among delegates that this has not solved some of the world’s important economic problems.
The world economic recovery continues. Although global growth is set to slow over the coming year, underlying private demand is improving and we expect the slowdown to be modest. Global growth should remain at 4.4 percent in 2011, down from 5 percent in 2010. But it remains a two-speed recovery: slow in advanced countries, and much faster in emerging and developing economies. As a result, tensions and risks are emerging, which require strong policy responses. In this post, Olivier Blanchard discusses the IMF’s update of the world economic outlook, including the short-term tensions and risks, and what needs to be done, to reduce risks and strengthen the global recovery.