Country-specific structural reforms can boost growth: IMF

In sub-Saharan Africa, stronger growth is expected because of supportive external demand conditions and strong investment demand, although prospects vary across countries. In the Middle East and North Africa, the recovery remains fragile even as growth is expected to start picking up modestly on the back of improving domestic security conditions and improving external demand. Similar considerations underpin modest improvements in activity in Russia and other economies of the Commonwealth of Independent States.

 

Although the pace of the global recovery has disappointed in recent years, country-specific structural reforms can strengthen potential growth or make#

The October WEO emphasizes the increase in downside risks—both in the short and medium term—that could dent global confidence and growth. These include heightened geopolitical risks, a larger-than-expected increase in US long-term interest rates, secular stagnation in advanced economies, and protracted low inflation or outright deflation, particularly in the euro area.

 

Although the pace of the global recovery has disappointed in recent years, country-specific structural reforms can strengthen potential growth or make#

In such a scenario, raising actual and potential output must remain a priority in most economies across the globe, says the IMF. In advanced economies, an increase in public infrastructure investment could provide a boost to demand in the short term and help raise potential output in the medium term, especially in US and Germany. In emerging market economies, the scope to use macroeconomic policies to support growth varies and is more limited in countries with external vulnerabilities.

 

Although the pace of the global recovery has disappointed in recent years, country-specific structural reforms can strengthen potential growth or make#

For both advanced and emerging market countries, there is a general, urgent need for country-specific structural reforms to strengthen potential growth or make growth more sustainable. For many countries, this means improving labor and product markets, including reforms to lower the costs of hiring on regular employment contracts and facilitating greater labor force participation (many advanced European economies and Japan), and easing barriers to doing business and investment in the services.

 

Although the pace of the global recovery has disappointed in recent years, country-specific structural reforms can strengthen potential growth or make#

“The challenge for both advanced and emerging market economies, is to go beyond the general mantra of ‘structural reforms,’ to identify which reforms are most needed, which reforms are politically feasible,” says Blanchard. More generally, Blanchard adds, policymakers need to “reestablish confidence through clear plans to deal with both the legacies of the crisis and the challenge of low potential growth.” (RKS)

 

Although the pace of the global recovery has disappointed in recent years, country-specific structural reforms can strengthen potential growth or make#