Concerted Policy Actions needed to increase Global GDP: IMF
If US, UK , China , Japan
According to the 2013 Spillover Report by IMF, after five years of global financial crisis, tensions and risks have lessoned in China, EU, Japan, US and UK but they have not made contributed to the global economic activity as much as they could. If these economies make improvements in their policies in mutually reinforcing ways, they would lift the Global GDP over the long run by as much as 3%. Thus the challenge for these economies has been to find policies that will help them reach their potential output without complicating, through spillovers and economic management in other countries.
The Report highlights that while global growth has continued to disappoint, much else has gone in the right direction. Global imbalances have continued to narrow, exchange rates have moved closer to where fundamentals suggest they should be; and policies of the US, UK, Japan, EU and China have enabled them to avert far worse outcomes. Global imbalances which are the gap between actual current account balances and those estimated by staff to be consistent with fundamentals and desirable policies—narrowed in 2012 to about ¾ percent of global GDP.
Both emerging markets and safe haven economies, including a number of smaller advanced economies, have seen episodes of significant capital flows, triggering a variety of policy responses. Furthermore, some oil-exporting countries continued to accumulate reserves, though the pace of accumulation slowed in the second half of 2012 as oil prices eased and domestic fiscal spending rose.
While easy monetary conditions in advanced economies appear to have contributed to some extent in exchange rate movements and capital flows, much of the capital flows seen over the last few years were driven by other factors such as growth prospects, and global risk appetite which will remain key factors in determining individual country outcomes.
Warm regards,
Dr. S P Sharma
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