Though braced by a resurgent US, the global economy is under threat from other regions – from Europe and Latin America to China and Japan – where growth is stalling and prospects remain dim.
That's the bleak picture facing global finance officials who are meeting in Washington to consider policies to address the world's uneven growth, TradeArabia reported Friday.
Their meetings follow downbeat assessments of the global economy issued this week by the International Monetary Fund (IMF), the Brookings Institution and the Federal Reserve.
The talks began on Thursday, October 9, with discussions among finance ministers and central bank presidents of the Group of 20 nations, which includes traditional powers such as the US, Japan and Germany and emerging economies such as Russia, China and India. Next will come meetings of the 188-nation IMF and its sister lending organization, the World Bank.
In a global forecast prepared for the meetings, the IMF downgraded its outlook this year because Europe is at risk of slipping back into recession and persistent weakness is slowing Japan, China and Brazil. The IMF called the recovery uneven and said global growth this year would be 3.3 percent. And it lowered its outlook for 2015.
Brookings' report spoke of the US as 'the sole major economy still showing signs of strength.'?
Fed officials took note of the weakness in overseas economies and the strengthening dollar at their September meeting, according to minutes released on Wednesday. The minutes indicated that officials worried that sluggish economies in Europe, Japan and China could depress US exports.
Concerns about Germany's economy – Europe's largest – have been mounting. The most recent figures show that industrial production, exports, factory orders and business confidence have all endured sharp declines.
Collectively, the figures raised the risk that Germany could slide into recession. The country is suffering from weak demand for its goods from the rest of Europe and China and from fears about the effect of sanctions imposed on Russia over the crisis in Ukraine.
IMF managing director Christine Lagarde warned Thursday that bold action was needed to bolster growth.
“In the face of what we have called the risk of a new mediocre, where growth is low and uneven, we certainly believe that there has to be a new momentum,” she said at an opening news conference.
Europe's weakness has raised pressure on the European Central Bank (ECB), which sets interest rate policies for the 18 nations that use the euro currency, to do more to promote growth and fight low inflation.
“We are accountable to the European people for delivering price stability, which means lifting inflation from its excessively low levels, and we will do exactly that,”?ECB head Mario Draghi said.
Treasury Secretary Jacob Lew and Fed chair Janet Yellen are representing the US at the discussions. US officials said they planned to urge other economies to step up efforts to boost growth and strengthen bank regulations to prevent a recurrence of the 2008 financial crisis.
The lopsided shape of the global economy has begun to have consequences.
