Group of Twenty IMF Report — IMF Annual Meetings
G-20 2019 Report on Strong, Sustainable, Balanced, and Inclusive Growth
October 2019
Prepared by Staff of the IMF with inputs from the OECD
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Executive Summary
The global economy is at a difficult juncture. Growth has become fragile, with slowing momentum across most G-20 economies and stressed emerging market economies struggling to regain footing. While global growth is projected to recover somewhat next year, downside risks remain elevated—driven by unrelenting trade tensions, lingering policy uncertainty, and escalation of geopolitical strains, along with a further buildup of financial vulnerabilities adding to risks over the medium term. And this comes at a time when low policy rates and high sovereign debt have reduced policy space. Furthermore, low productivity growth and aging weigh on the medium-term outlook in many economies, and inclusiveness remains elusive as access to opportunities is not equally shared.
Bold and broad-based policy action will put growth on a stronger, more stable path and benefit all. Using all available tools, as appropriate, promises the greatest impact and can raise the level of G-20 GDP by more than 4 percent over the longer run.
- Well-coordinated macroeconomic and financial policies will support growth and safeguard stability in the short term. This requires accommodative monetary policy where inflation is below target and fiscal policy successfully balancing the trade-offs between supporting demand, ensuring sustainability, and protecting vulnerable groups. Gradually strengthening balance sheets and mitigating risks from high leverage, in particular amid low (and declining) interest rates, would support stability and ensure the durability of growth. Amid fragile growth, fiscal measures should be identified to allow for their quick deployment in the event of a further growth slowdown.
- Completing the structural reform agenda will help lift the growth trajectory going forward. Priorities include product market reforms to foster competition, innovation, and investment—in both human and physical capital—and labor market reforms to boost labor force participation and counter the impact of aging on growth and associated fiscal costs. Where demand is lacking, macroeconomic support, as appropriate, can bring forward the growth benefits of labor market reforms. Fiscal policy and structural reforms can support each other to reduce unwanted current account imbalances and foster higher, sustainable, and more balanced global growth.
- Carefully-targeted action will help ensure that higher growth is widely shared. Investing in education will help lift productivity and raising labor market participation rates—in particular among youth and women—can improve market outcomes of vulnerable groups. At the same time, fiscal policy tools can ensure that everyone benefits from rising aggregate income. In turn, this will help generate support for difficult-but-needed reforms and enable even higher growth.
Together, G-20 policymakers can contain risks, reduce uncertainty, and create new opportunities. Reversing trade barriers and fast, tangible progress toward a better multilateral trading system are a must. Working together, policymakers can reinvigorate global trade and lift the uncertainty contributing to weak investment and growth across countries. A modernized open, stable, and transparent trading system, adjusted to the changing needs of the global economy, would bring new opportunities for growth for all involved. This would be greatly helped by efforts to strengthen the system for taxing multinational enterprises, ensure completion of post-crisis regulatory reforms, and secure progress in strengthening the global financial safety net.
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