millionday] Countries will need to adopt strong national policies and work together even more closely to manage new transitions under way in the global economy, IMF Managing Director Christine Lagarde said in a speech at George Washington University ahead of the 2013 World Bank-IMF Annual Meetings.
Two transitions—economic and financial Lagarde highlighted two new transitions: one in the pattern of economic growth, and another toward a different kind of financial sector. “The transitions I am talking about today are different,” Lagarde told the audience.
“They will likely play out over the rest of the decade, if not longer. And they will require not only active national policy management, but also active international policy collaboration."
Read More Link On Right
“These new global transitions need a new global agenda,” she said. “With the right policies, these transitions can be managed,” Lagarde pointed out. “But of course, they can be derailed by the wrong policies.”
[millionday] this is what lagarde has said about this meeting
[millionday] Lagarde noted that although the global outlook remained subdued, there were “signs of hope” from advanced economies—the United States, the Euro Area, and Japan.
The Managing Director stressed the important role played by monetary policy. Any pending normalization of monetary policy in the United States needs to be managed carefully, Lagarde cautioned, noting that the U.S. has a special responsibility “to implement it in an orderly way, linking it to the pace of recovery and employment; to communicate clearly; and to conduct a dialogue with others.”
[millionday] this is the last she said about existing economies
[millionday] Monetary policy has bought some time and space, she said. The key is to use the time wisely and take advantage of this space, highlighting the need for all advanced economies to move on a broad policy front, but with different emphases.
This means financial effort in the Euro Area, restoring banks to health; fiscal effort in the United States and Japan, making debt more sustainable; and structural effort in the Euro Area and Japan, where policies to boost supply can pay off in terms of growth and jobs.
In the midst of U.S. fiscal challenges, Lagarde said, the ongoing political uncertainty over the budget and the debt ceiling does not help.
“The government shutdown is bad enough, but failure to raise the debt ceiling would be far worse, and could very seriously damage not only the U.S. economy, but the entire global economy,” she warned. “So it is ‘mission-critical’ that this be resolved as soon as possible
[millionday] now i will bring what she said about emerging economies represented at the conference
[millionday] iraq is an emerging economy
[millionday] While the emerging markets drove the recovery for the past five years, growth momentum is slowing and the external environment is becoming more challenging—partly due to the anticipated exit from easy monetary policies in the United States.
The immediate priority for emerging markets is to ride out the turbulence as smoothly as possible, Lagarde said, spelling out some of the needed policy responses to prevent these economies getting stuck in low gear—including currency depreciation, liquidity provision, and structural reforms
millionday] in a previous note from world bank --- the emerging countries have a couple month window to get all ready or miss whatever it is coming
[millionday] Low-income countries, too, are in the process of profound transition, Lagarde said. Their transition, however, is not without risks.
“The low-income countries sit between the advanced country rock and the emerging market hard place,” Lagarde noted. Lagarde also called for the international community to help the Arab transition countries keep up the drumbeat for economic reform.
[millionday] call fo the international community to help the hurry for arab transition that is going on -- so reforms are done and activated -- huge part of this conference -- the goal is to complete by what i have read
[millionday] she is referring to some type of economic transition through the globe
[millionday] Lagarde pointed to a second fundamental transition—one taking place in the global financial sector. This transition, however, remains a case of “mission not yet accomplished,” she said.
While there has been some progress—for example, in improving capital and liquidity standards, and identifying systemically-important financial institutions—the sector still needs to shift from the “old model”, where the sector “took on outsized risk in pursuit of outsized rewards, causing outsized ruin
millionday] Building something new is not easy, Lagarde said, acknowledging the complexity, but also the delay and divergence across countries. She urged faster progress on outstanding areas, including derivatives and shadow banking.
In managing well these two major transitions—economic and financial—international collaboration is the only way forward, Lagarde concluded. “Mutual help is the best form of self help.” That, in turn, means that the IMF will need to be more helpful than ever before, Lagarde noted.
[millionday] wow -- sounds like the ride is full of change as well -- we shall see very soon but she has made it clear that huge changes are coming to the economic world we have known --- hope it makes it more fair for those countries that cant even feed their children
[millionday] let me look at what else i can find -- be back in a few
[millionday] that sounds like a mystery of some sort -- huge change coming it looks like or what else could it mean? Hmmmm lol
[millionday] At “Emerging Markets: Restoring the Momentum,” a group of experts observed that most emerging economies have reaped substantial benefits over the past decade from cheap capital, high commodity prices, and strong growth in China.
But a tightening in global financial conditions in recent months is exposing a divergence in these economies—some have strengthened economic fundamentals, while others simply rode the wave of good fortune.
Thanks to reforms pursued after the financial crises of the 1990s, many emerging economies are now more resilient and better able to avert any problems that arise as a result of a reversal of the positive external conditions.
In order to boost their growth potential, however, these countries may now need to pursue a second generation of reforms, the panelists said.
millionday] “It is important for policymakers to recognize the changing dynamics of the global economy and design economic policies accordingly,” said Naoyuki Shinohara, IMF Deputy Managing Director. Joining Shinohara on the panel were Tim Adams, head of the Institute for International Finance; Luis Miguel Castilla, Finance Minister of Peru; and Nouriel Roubini, Co-founder and Chair of Roubini Global Economics.
[millionday] It is difficult to quantify how much of the slowdown in emerging markets is permanent or temporary, panelists said.
Some of the factors affecting the prospects of emerging markets include the slowing of China, the end of the commodity price boom, and the tapering of unconventional monetary policies in some advanced economies.
“How much of these factors is structural and how much is cyclical is ambiguous,” said Roubini. The good news, he said, is that emerging markets have become more resilient in recent years, with a “war chest” of reserves, more flexible exchange rates, and stronger financial systems.
But policy decisions will not be easy, he cautioned: “Whether you tighten monetary policy or ease it, each choice has its tradeoffs
[millionday] Castilla observed that Peru was set to grow at rates over 6 percent—double the Latin American average—over the next few years. With the changing global circumstances, the question is how to maintain this momentum in the future, and that entails reforms, he said.
His country is in a better position than its neighbors, Castilla said. Although richly endowed with gold and copper resources, Peru is not particularly threatened by the prospect of a change in external conditions.
“Our dependence on tax revenues coming from commodities is 4 percent of GDP,” he said, noting that this level is much lower than that of other commodity producers in Latin America.
“We have been able to diversify our economy, and we are increasingly dependent on domestic drivers of growth,” he said. Markets will increasingly distinguish between the emerging economies that have sound fundamentals, like Peru, and those with budding vulnerabilities such as large current account deficits, large fiscal deficits, sharply slowing growth, and rising inflation, Roubini noted.