The IMF on Wednesday called on the G20 to take clear steps to spur growth at this weekend’s meeting of finance ministers in Australia.
In February in Sydney, G20 finance ministers fixed a goal of raising global economic growth by 2 percent over the next five years, but left the strategies to reach it vague.
According to the 188-nation IMF, advanced economies that have the means — specifically the US and Germany — and certain emerging market economies like Brazil and India should increase public spending on infrastructure.
Structural reforms are needed across all G20 economies to boost output, it said, saying that an increase in productivity would come from easing limits on trade and investment in Indonesia, Russia and Turkey.
The IMF called for labor reforms that lift gender and age barriers in advanced economies, such as the US and Japan, and allow greater participation, such as in South Africa, where an “important fraction” of the population remains unemployed.
“Actions to increase labor demand and remove impediments to employment are also needed in stressed euro area economies,” it said.
The Organisation for Economic Co-operation and Development (OECD) this week cut its growth forecasts for most major advanced economies, with the global economy dragged by a sluggish eurozone, tension in Ukraine and the Middle East, and uncertainty over Scotland’s future.
Australian Treasurer Joe Hockey, who is set to chair the Cairns meeting, admitted reaching the goal could be challenging.
“Whatever the progress on our 2 percent growth ambition reported in Cairns, we have to do better. If anything, the world outlook has become a bit more uncertain since February, so we have to redouble our efforts to ‘shift the dial’ on growth,” he said. “But without agreed ambition and mutual pressure, very little will ever be achieved.”
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