World Bank, IMF Annual Meetings Highlight Improved Growth, Opportunity for Change
The annual meetings of the World Bank Group (WBG) and the International Monetary Fund (IMF) drew to a close on Sunday 15 October, capping several days of meetings that brought to the fore issues of inequality, sustained global growth, multilateralism, and development financing.
This year’s event was held in Washington, where both institutions have their headquarters, and brought together finance ministers, central bankers, and development ministers from the two organisations’ member economies.
The gathering came just as negotiators down the road in Virginia were in the final days of the fourth round of talks to update the North American Free Trade Agreement (NAFTA) – an event which served as a reminder of the changing geopolitical landscape on trade and global growth, and prompted numerous questions during the Annual Meetings’ press conferences.
The debate extends beyond NAFTA, bringing up questions over policy uncertainty, the future of multilateralism and the post-war world order, and how to make the current system fit for purpose in the twenty-first century.
Moreover, officials also stressed the importance of shoring up the global economic recovery, particularly in light of recent improvements in trade and other areas.
“I see three priorities: get the economic fundamentals right; tackle more decisively the issue of excessive inequality; and address the major concerns of our young people to help ensure bright prospects for them and for future generations,” said IMF Managing Director Christine Lagarde in her speech to the plenary.
Similar themes were raised by her World Bank counterpart, who also noted the “multiple crises,” from climate change to inward-focused policy approaches, which require action and resources to ensure better resilience and equal opportunity.
“It often feels like our increasingly interconnected world is in fact falling apart and countries and peoples are pulling away from each other. Amidst this turbulence, organisations like the World Bank Group must step forward and help to build new foundations for human solidarity,” said World Bank Group President Jim Yong Kim in his own plenary remarks.
Global economy: IMFC notes “window of opportunity”
The International Monetary and Financial Committee (IMFC) and the Development Committee are the two steering bodies of the international financial institutions, with the former specifically focused on the IMF and the latter being a joint IMF-World Bank Group event. Both involve ministerial-level participation from a selection of the organisations’ membership.
Going into the meet, the IMF released updated estimates placing global growth for 2017 and 2018 at 3.6 percent and 3.7 percent – an improvement from earlier projections. However, it also noted downward revisions to growth estimates for the US and UK, with better prospects for Canada, Japan, and the euro area.
The semi-annual World Economic Outlook warns specifically of risks such as increased protectionism in trade and investment, along with other financial concerns. Furthermore, it warns that “non-economic factors,” such as “extreme weather events,” could also have damaging implications for future growth.
In its final communiqué, the IMFC noted the improvements in global economic growth, while warning that risks remain going forward. The statement was structured around the future of the global economy; financial stability in the longer term; inclusive, credible institutions; and addressing “shared challenges” such as the implementation of the Sustainable Development Goals (SDGs).
“The welcome upturn in global activity provides a window of opportunity to tackle key policy challenges and stave off downside risks, including by ensuring appropriate buffers, and to maximise returns on structural reforms to raise potential output,” the IMFC said.
Summing up the meeting, outgoing IMFC chair Agustín Carstens of Mexico warned that “there is no room for complacency,” while outlining the committee’s recommendations for pairing monetary policy with “growth-friendly” fiscal policies and “well-sequenced structural reforms.”
Tackling the gender gap
Addressing concerns over inequality was a recurrent theme throughout the Annual Meetings, in light of political developments seen across various economies and data suggesting that inequality is a problem not just among different countries but also within national borders.
IMF and World Bank officials both stressed that one key move to address inequality would be to reduce deep disparities between men and women across a host of areas.
“I think the most efficient way to reduce the inequalities would be to actually close the gender gap between men and women, and that is a no-brainer. Whether it is access to the labour market, whether it is access to finance, whether it is the gender gap in terms of compensation, that would achieve a lot in order to reduce inequalities,” Lagarde told reporters last week.
Notably, the Annual Meetings saw the formal launch of the Women Entrepreneurs Finance Initiative (We-Fi), a scheme hosted by the World Bank aimed at making it easier for women entrepreneurs to access the resources they need to be successful. According to the World Bank, donors have already pledged US$340 million, with the goal of eventually reaching US$1 billion.
We-Fi also has the support of a host of countries, including Australia, Canada, China, Denmark, Germany, Japan, Netherlands, Norway, Russia, Saudi Arabia, South Korea, the United Arab Emirates, the United Kingdom, and the United States.
“Our mission – to end poverty and increase prosperity – can’t be accomplished unless we tap the full potential of women entrepreneurs,” said Kim.
Financing for development
Another issue raised during the Annual Meetings was the importance of leveraging greater investment for meeting the Sustainable Development Goals (SDGs), the World Bank “twin goals” of increasing shared prosperity and eradicating poverty, and tackling the climate challenge.
The financing issue was raised by the Development Committee in their closing communiqué, which called both for private sector support in this effort, along with “enhanced coordination and partnership across multilateral development banks (MDBs) and other international financial institutions (IFIs).
Kim, for his part, repeatedly flagged in his speeches the importance of supporting greater financing for development, including from private sector sources, in order to meet some of the world’s largest risks – such as climate change or forced displacement.
“We know that official development assistance will not be enough to meet the US$4 trillion per year needed to achieve the Sustainable Development Goals and meet the world’s rising aspirations,” he told the plenary. He also called for a capital increase for the Bank itself, in order to support such goals.
The next meetings of the IMFC and Development Committee will be during the IMF-World Bank Group Spring Meetings, set for 20-22 April 2018 in Washington. Next year’s annual meetings will be in October in Bali, Indonesia.