The Spring Meetings of
the International Monetary Fund (IMF) and the World Bank, which will
bring central bankers, finance ministers, academics and private sector
executives from around the globe, begins in Washington Friday. The
three-day event comes at a time when threats to global economic growth —
such as the slowdown in China and emerging economies and the looming
specter of the U.K.’s departure from the European Union — have come into
sharp focus.
“In the global economy, there are not many bright spots
around the world -- the United States is one among the developed
economies and India is another among the middle-income countries,” World
Bank Group President Jim Yong Kim said during a press conference
Thursday. “Growth remains weak in Europe and Japan, and among emerging
economies, Russia and Brazil are projected to post negative growth once
again. We have just downgraded our global growth economic forecast this
year to 2.5 percent from 2.9 percent.”
“The weakening global economy threatens our progress toward ending extreme poverty by 2030,” he added.
The IMF, on its part, has also been bearish on the global
economy. Earlier this week, the lender, citing a “disappointing” pace of
growth across the world, slashed its 2016 growth forecast by 0.2 percentage points, to 3.2 percent from an earlier 3.4 percent.
A year ago, IMF’s growth prediction for 2016 stood at 3.8 percent.
“There is recovery and there is growth, but it is too slow, too fragile,” IMF chief Christine Lagarde told CNBC Thursday.
“When you look at poverty levels, when you look at the number of people
unemployed, when you look at inflation, when you look at debt, all of
that is not moving in the right direction.”
In recent months, there has been a marked rise in countries seeking
emergency aid from the two global lenders. Last week, Angola — a country
that derives 95 percent of its export earnings from oil and has been
badly battered by the global drop in its prices — requested a three-year bailout program from the IMF. And, earlier this week, the World Bank said
that in the fiscal year 2016, it is on track to lend as much as $25
billion to middle-income countries — all of which are reeling under the
precipitous drop in commodity prices and exports — through its main
lending arm, the International Bank for Reconstruction and Development.
“This increased demand underscores the importance for donor
countries to support our replenishment this year for the International
Development Association, or IDA, which gives low-cost loans or grants to
the poorest countries,” Kim said Thursday. “A strong IDA replenishment
this year will be essential for us to work on our goals to end extreme
poverty and boost shared prosperity.”
Two crucial issues that have further muddled global growth
outlook, and that are likely be discussed during the meeting, are the
prospect of the so-called Brexit, which the IMF has repeatedly said could inflict “severe regional and global damage,” and the recent Panama Papers revelations that shed light on the rampant use of offshore tax havens by corporations.
“When taxes are evaded, when state assets are taken and put
into these havens, all of these things can have a tremendous negative
effect on our mission to end poverty and boost prosperity,” Kim said.
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