Jaitley to IMF: Ensure future-proof global economy
Finance Minister Arun Jaitley has asked the International Monetary Fund (IMF) to reinforce its resources to ensure ‘future-proofing’ of the global economy against recurrence of financial crisis.
At the meeting of the International Monetary and Financial Committee (IMFC) in Washington on Saturday night, Jaitley said subdued growth and low productivity in advanced economies and elevated risks faced by emerging market economies (EMEs), as also risks of instability of financial system, are hurting global recovery.
He also asked advanced economies to be “mindful” of the spillover effect of their policies on the rest of the world as global headwinds continue to batter global markets.
“Flagging trade volumes, softening commodity prices, idle capacities and anemic economic fundamentals, particularly in a number of large EMEs are increasingly impairing their ability to sustain economic and financial resilience against rising risk premiums and credit risks.”
Moreover, there are the risks of exogenous shocks from asynchronous normalisation of unconventional monetary policies (UMPs) that can produce disorderly adjustments in exchange and volatile capital flows - increasing the cost of managing external exposures and balance of payments, he said.
Jaitley reiterated India’s balanced macroeconomic environment and strong growth prospects make it a ‘bright’ spot in the global scenario.
He said the Indian economy has managed to put across a credible performance with an estimated growth rate of 7.6 per cent in the 2015-16 fiscal as against 7.2 per cent the year before.
“The growth performance is more credible given that it has been achieved despite contraction in our exports due to slowdown in global economy and two consecutive years of monsoon shortfall,” he said.
But he conceded that there are concerns about export growth which is declining consecutively for more than a year due to slowdown in global demand. (SH)
Fibre2Fashion News Desk – India