World needs more equality, says IMF
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GLOBALIZATION has largely benefited the world but must be “different” in the future, with world governments working more to prevent persistent inequality, IMF chief Christine Lagarde said yesterday.
“We know that globalization has worked over the years that it has delivered great benefits to many people,” Lagarde, the International Monetary Fund’s managing director, said at the opening of joint annual meetings with the World Bank.
“We don’t think it’s time to push against it,” said Lagarde, pointing specifically to the rising debate over free trade.
“It needs to be slightly different, it cannot be that push for trade as we have seen it historically.”
Both the IMF and the World Bank, longtime supporters of free trade, face a political climate in which trade liberalization is increasingly unpopular.
The failure to support displaced workers and others affected by globalization has encouraged protectionist sentiment in the developed world, according to the IMF. Last June Britain voted to secede from the European Union and both US presidential nominees have said they oppose the White House’s Pacific Rim trade pact.
Lagarde called on member states to make the forces of economic globalization “work for all and to pay attention to those that are at risk of being left out, whether it is as result of technology digital economy or international trade.”
Also addressing reporters yesterday, World Bank President Jim Yong Kim likewise acknowledged the need for inclusive economic development.
“Our research shows that inequality is still far too high, both globally and within countries, constraining growth and breeding instability,” he said.
“We need to focus on growth and continue to reduce inequality — and we have to make growth more equitable, and more sustainable,” he said.
Lagarde called yesterday for action around the world to revive growth and tackle inequality, singling out Germany, Canada and South Korea to provide stimulus.
The IMF this week forecast “subdued” global growth of 3.1 percent this year, rising to 3.4 percent next year, with the developing world expected to outpace advanced economies.
“My hope at the end of the annual meeting is that each finance minister, each governor of a central bank, will go back home thinking, ‘What can I do in order to propel that growth which is currently too low, for too long benefiting too few?’” said Lagarde.
Lagarde pointed to three leading economies as examples of states that have the financial wherewithal to spend more to accelerate growth.
“We believe that some countries have fiscal space. Well if so, the should use it,” she said.
“We are certainly including in that category countries like Canada, like Germany, like (South) Korea.”
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