The global economy remains on an upswing but with high debt levels and threats of trade conflict there are reasons for concern for sustained growth IMF Managing Director Christine Lagarde said Wednesday in Hong Kong.
Lagarde said “policymakers cannot afford to stand still” adding that “the IMF have been calling on all governments to use the current growth momentum for much needed policy actions and reforms, particularly in the labor market and in the service market.”
She warned also that after years of loose monetary and fiscal policy, that global public and private debt is at an all-time high, and that countries should be ready for tightening conditions.
“Public debt in advanced economies is at levels not seen since the Second World War.”
The IMF recommends building policy “buffers” to protect the next financial downturn. Lagarde said “this is about creating more room to act when the next downturn inevitably comes.”
Lagarde said [When] “the sun is shining, we need to fix the roof.”
She also warned of widening income gaps between the richest and poorest countries, but also that nations must also develop policies to spark more inclusive growth in their own economies.
IMF Director also pointed out that good jobs are not only in the manufacturing sector, but that big jumps in productivity can also be fostered in the service sector and pointed out the transformative power of digital technology.
She said “digital government can actually deliver public services more efficiently, more effectively and actually help people’s life. I’ve often lauded the virtues of courage, but I believe in the present circumstances it’s a combination of collaborative courage, collective determination to actually transform our economies so that economic underlying factors do not come to exacerbate differences, hamper diversity that we so badly need in this world.”