Inflation on agenda as calmer backdrop greets IMF
THE global economy is strengthening but faces threats from super-low inflation and outflows of capital from emerging economies, the International Monetary Fund warned.
The lending organisation expects the global economy to grow 3.6% this year and 3.9% in 2015, up from 3% last year. Those figures are just one-tenth of a percentage point below the IMF's previous forecasts in January.
The IMF, in its World Economic Outlook report, makes no changes to its forecasts for US growth, which it estimates at 2.8% this year and 3% in 2015.
The 188-nation IMF and its sister organisation, the World Bank, will hold their spring meetings in Washington this weekend. Finance ministers and central bank governors from the Group of 20 leading economies will meet on Thursday.
The issues highlighted in the IMF's outlook, such as alarmingly low inflation, are likely to be high on the agenda. Yet the meetings will be relatively free of the crisis atmosphere that beset the IMF for several years after the global financial meltdown and European debt crisis.
"Relative to previous years, the global economy is more stable," said Jacob Kierkegaard, a senior fellow at the Peterson Institute for International Economics. "This is going to be an annual meeting that will be more about process and medium- to long-run goals," than about short-term actions, he said.
Nevertheless, analysts expect European officials, particularly the European Central Bank, to come under pressure to fight low inflation. Last week, Christine Lagarde, the IMF's managing director, urged the ECB to take "unconventional measures" to push prices up.
Such steps could include the purchase of bonds or other financial assets. The US Federal Reserve and the Bank of Japan have both made such purchases to try to stimulate their economies.
Ms Lagarde's comment drew a rebuke from ECB president Mario Draghi. He noted tartly that the IMF "has been ... extremely generous in its suggestions on what we should or should not do" and added that the ECB disagreed. Even so, the IMF "will reiterate the message that the ECB should be more aggressive", said Domenico Lombardi of the global economy programme at think-tank CIGI.