World Bank, IMF call for multilateralism at "delicate moment"
A man passes by a money exchange shop near the Bank of England in London, March 6, 2019. (Xinhua/Stephen Chung)
WASHINGTON, April 14 (Xinhua) -- At a time when the global economy enters "a delicate moment" featuring "broad-based slowdown," key international financial institutions call for strengthening multilateral cooperation.
The World Bank and the International Monetary Fund (IMF) wrapped up their spring meetings on Sunday, stressing the urgency to better address unfair trade practices.
DELICATE MOMENT
The IMF released its new World Economic Outlook report on Tuesday, in which the institution lowered its global growth forecast for 2019 to 3.3 percent, down 0.2 percentage point from its estimation in January. For 2020, it expected global growth to return to 3.6 percent.
IMF chief economist Gita Gopinath wrote in a blog post that the projected slowdown in 2019 is "broad-based."
"We contend that we are at a delicate moment," IMF Managing Director Christine Lagarde said at the opening press conference of the spring meetings on Thursday.
The IMF chief said her institution "would recommend two key principles. One is, do no harm. Second, do the right thing," adding that the key is to avoid the wrong policies, especially on the trade front.
"We need to better address dislocations caused by trade and by technological innovation, however intertwined they are. And we need to do more for those who are left behind," Lagarde said.
The IMF chief said countries should better address unfair trade practices, including through a World Trade Organization system reform. "And we need to avoid self-inflicted wounds, including tariffs and other barriers," she said.
As for "do the right thing," Lagarde said many outstanding reforms should be the focus of policy makers, because they "would help boost potential output to prevent disappointing long-term growth in advanced economies, and would help developing countries catch up with their wealthier peers."
Meanwhile, the managing director also called on countries to create more fiscal space in order to "resist the next crisis" when downturn comes up, and suggested policy makers enhance international cooperation on issues such as corporate taxation and corruption.
In a statement issued Saturday after the World Bank Development Committee concluded its 99th meeting, World Bank President David Malpass said that the multilateral development institution's mission is "more urgent than ever."
"It is critically important that we work tirelessly to foster broad-based growth, raise median incomes, create jobs, and fully incorporate women and young people in economies, to support a stronger, more stable global economy for everyone," said Malpass, who is recently elected to lead the World Bank.
Despite the IMF's gloomy economic forecast, finance officials of the world's major economies, according to media reports, were relatively upbeat about managing risks.
U.S. Treasury Secretary Steven Mnuchin said on Saturday that he was hopeful Washington and Beijing are "close to the final round" of trade talks. Britain's Chancellor of the Exchequer Philip Hammond said the government and main opposition party could strike a Brexit deal within weeks.
While admitting that risks had not disappeared, European Central Bank President Mario Draghi touted the eurozone's "remarkable resilience," citing an increase in job creation, a strong service sector and rising incomes and wages.
MULTILATERALISM UPHELD
The International Monetary and Financial Committee (IMFC), IMF's policy-setting body, said in a communique issued Saturday that members of the committee will "continue to take joint action to strengthen international cooperation and frameworks."
The IMFC said its members will work together to reduce excessive global imbalances, strive for a globally fair and modern international tax system, and enhance debt transparency and sustainable financing practices.
On trade, the IMFC said free, fair, and mutually beneficial goods and services trade and investment are key engines for growth and job creation. "To this end, we recognize the need to resolve trade tensions and support the necessary reform of the World Trade Organization (WTO) to improve its functioning."
Commenting on the current situation of global trade, WTO Director-General Roberto Azevedo told an event at the Washington-based Peterson Institute for International Economics on Thursday that "clearly tensions remain high."
The director-general said he recognizes "the frustration that many have felt" about trade, as well as the need to speed up reforms.
"Multilateralism should not be synonymous with paralysis," he added.
In the "Global Policy Agenda 2019" issued by Lagarde, the managing director expressed her concern about the "rising disengagement" in the global economy that has led to many countries not benefiting adequately from international cooperation, economic and financial integration, and technological progress.
The challenges facing the world, Lagarde said, "can only be met in a new multilateralism that instills confidence that the costs and rewards of lasting solutions will be shared by all."
In an exclusive interview with Xinhua on Tuesday, Gopinath said "the retreat from globalization, the rise in protectionism is clearly one of the major trends of our time, which is a reversal from the past," adding that the trend is "a matter of great concern" for this year's spring meetings.
Gopinath underscored the need for countries to continue engaging with each other in the pursuit for cooperative solutions "to make this a better multilateralism."
"I don't see an alternative to a multilateral work," she said, adding that issues like trade, climate change, cyber security and international taxation all require that countries cooperate and come up with joint solutions.
CHINA'S CONSTRUCTIVE ROLE
As one of the major shareholders of both the IMF and the World Bank, China has been a major focus throughout the spring meetings.
In his statement to the IMFC meeting, Chen Yulu, deputy governor of the People's Bank of China -- China's central bank -- stressed the IMF's "central role" in global finance, urging that the IMF continue to support "an open, inclusive, and rules-based multilateral trade system."
"With a membership of 189 countries, the IMF enjoys special advantages and trust in strengthening international coordination and cooperation and can play a greater role," Chen said.
The deputy central bank chief stressed, in particular, the need to reform the IMF's quota arrangement and governance so that emerging market economies and developing countries can be better represented at the multilateral institution.
"China supports a strong, quota-based, and adequately-resourced IMF to preserve its central role in the global financial safety net," Chen said. "The gap between the actual and calculated quotas should be narrowed in a constructive manner and the structural distortion of quotas should be reduced."
IMF Deputy Managing Director Zhang Tao said in an interview with Xinhua that the IMF remains "committed to the realignment of quota shares to more accurately reflect members' representation."
When meeting with Malpass on the sidelines of the spring meetings, Chinese Finance Minister Liu Kun said China is willing to deepen its cooperation with the World Bank on lending programs and knowledge sharing.
In addition, China also looks forward to cooperating with the World Bank in such areas as improving the business environment and establishing a high-standard multilateral financing cooperation center, the minister said.
Malpass, said the two sides share a great responsibility in combating poverty and spurring global development, and that the World Bank is also willing to work with China on pollution prevention and control, green development, as well as coping with climate change.
At Thursday's press conference, Malpass said in response to a question from Xinhua that he looks forward to a constructive relationship between the international lender and China.
Over the past three decades, China's relationship with the World Bank has been evolving, in that the country has shifted from being a "major borrower" from the World Bank to "becoming more of a donor" to the institution and its shareholders, said Malpass.
"We value that constructive relationship," he said.
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