Faced with fears of a global economic slowdown, global financial policy makers on Saturday said they stood ready to “promptly shore up growth” if needed.
“To protect the expansion, we will continue to mitigate risks, enhance resilience, and, if necessary, act promptly to shore up growth for the benefit of all,” the International Monetary and Financial Committee said in a statement released Saturday. The committee, made up of central bank governors and finance ministers, is the main advisory panel for the 189-nation IMF. Its statements provide guidance for the IMF’s work program. The statement was released at the spring meetings of the IMF and World Bank.
The committee said that while growth is forecast to pick up in 2020, risks remain tilted to the downside. Concerns include “trade tensions, policy uncertainty, geopolitical risks, and a sudden sharp tightening of financial conditions against a backdrop of limited policy space, historically high debt levels, and heightened financial vulnerabilities.”
Earlier this week, the IMF cut its world economic forecast for the third time in six months. The IMF now sees global growth of 3.3% this year -- down two-tenths from January, and four-tenths from October -- followed by 3.6% growth in 2019. The IMF cut its U.S. growth estimate for 2019 by two-tenths to 2.3%, its euro area forecast by three-tenths to 1.3% and its Canadian forecast by four-tenths to 1.5%, among other changes
The statement said fiscal policy “should rebuild buffers where needed, be flexible and growth-friendly, and strike the right chord between ensuring debt sustainability, supporting demand while avoiding procyclicality, and safeguarding social objectives.”
On monetary policy, it said central banks ensure that inflation remains on track toward, or stabilizes around targets and that inflation expectations remain anchored.
“We will monitor and, as necessary, tackle financial vulnerabilities and emerging risks to financial stability, including with macroprudential tools,” the statement said.