The head of the International Monetary Fund has called on global leaders to take “forceful” action to revive the world economy, sounding a stark warning ahead of the G20 summit.
Christine Lagarde, the IMF managing director, said that as of 2016, global economic growth had stagnated for five years below the 3.7% average that prevailed between 1990 and 2007, AFP reported.
“Not since the early 1990s... has the world economy been so weak for such a long time,” Lagarde said in a note issued to coincide with the start of the summit.
The Group of 20 summit is due to convene in Hangzhou, China beginning Sunday amid a climate of sluggish growth and global uncertainty.
Lagarde said the world’s economies faced a potentially toxic mix of low long-term growth and rising inequality, creating political temptations to populism and raised trade barriers.
But analysts say the G20 summit is unlikely to achieve a breakthrough, given that it occurs in the absence of a crisis which could prod governments to take action.
Lagarde said the world faced a “low-growth trap”—high debt, weak demand, eroding work forces and labor skills, weakening incentives for investment and slowing productivity.
In a report on global economic conditions for G20 members, IMF economists said US growth would likely be weaker than previously expected in 2016.
In its G20 report, the IMF said G20 leaders in 2014 had pledged to raise their collective GDP by 2% by 2018. But, as of 2016, member countries had carried out only 55% of the commitments they made then, demonstrating a “lack of determined policy action.”
“More progress is urgent,” the report said, calling also for new fiscal and monetary policies to support growth, such as public investment in education, more equitable tax-benefit regimes and reducing private-sector debts.
