Lagarde says strong global growth should be more widely spread

IMF-World Bank meeting hears recovery affects only 75 per cent of global economy

IMF MD Christine Lagarde  at the plenary session of the  IMF/World Bank meeting October 13th. Photograph:  AFP/IMF

IMF MD Christine Lagarde at the plenary session of the IMF/World Bank meeting October 13th. Photograph: AFP/IMF

 

IMF managing director Christine Lagarde said she expects global economic growth to strengthen next year, but urged countries to invest more to ensure the economic recovery is more widely spread.

Addressing the plenary session of the autumn IMF-World Bank meetings in Washington, Ms Lagarde said that after years of mediocre performance, she expects global growth to be stronger this year. While the recovery would affect 75 per cent of the global economy as measured by GDP, it still needed to be more widely felt, she said.

Earlier in the week the IMF upgraded its outlook for economic growth, projecting global growth of 3.7 per cent next year.

Noting that labour and product market reforms are more potent during economic upswings, she urged countries to invest more in health and education and to ensure that women are not faced with legal impediments and bias in taxation that may prevent participation in the global economy.

Returning to a theme raised earlier in the week, she said that IMF research had found that some advanced economies could raise their top tax rates without slowing growth – a warning that will have particular resonance in the United States where the Republican party is currently trying to advance a tax reform plan that will cut taxes which many believe will benefit those in the top tax band.

Meanwhile the head of the IMF’s Europe department, Poul Thomsen, said the euro zone should use its “robust” economic rebound to tackle politically-difficult reforms.

“This is the time for authorities in countries that need to build fiscal space to do so. This is the time for regulators in countries where banks need to clean their balance sheets to start doing so,” Mr Thomsen said. “And this is the time for countries that need to make structural reforms to boost productivity to start doing so. If not now, when?”