World Economy

Global Growth Weak, Fragile, Uneven

Global Growth Weak, Fragile, UnevenGlobal Growth Weak, Fragile, Uneven

The former deputy managing director of the International Monetary Fund has warned that countries are not working together to implement measures to achieve growth at a time of “great uncertainty” for the global economy and one that presents significant challenges for China.

John Lipsky, a renowned international economist who worked at the IMF during the global financial crisis, told the 25th annual Diggers & Dealers mining conference in western Australia that global growth would continue t o be “weak and fragile” and “uneven”, ABC reported.

On top of this, Lipsky said the Chinese economy faced a “pretty big task” implementing the reforms required to achieve its growth targets.

Lipsky said there was a great deal of debt associated with China’s state owned enterprises which created an “obvious problem”.

“SOEs account for 55%, in GDP terms, of all credit but their output is only about 22% of GDP,” he said. “In other words, the problem is obvious”.

He said he would not be drawn on whether he believed China would make successful strides towards achieving its latest five-year plan–it’s 13th–only noting it was critical to the countries’ growth ambitions.

“The challenge is many of the elements in the 13th five-year plan were in the 12th five-year plan and then the 11th five-year plan, which suggests that despite its governmental form in which it is assumed that if the central government decides something it gets done, obviously this process is a lot more complicated and there are lots of different interests in play,” he said.

Lipsky said with many economies yet to fully recover from the impact of the financial crisis, it was imperative that the Group of 20 member countries commit to reforms from the Hangzhou summit in China in September.

“Despite its success in counteracting the global financial crisis, I had hoped and expected there would be more clear-cut support for this [G20] political process,” Lispky said.