Member countries of the International Monetary Fund have pledged to work to reduce global imbalances but without evaluating the effects of destabilising monetary policies and trade protectionism.
There is no universal policy prescription for diverse economies at different conjunctural stages. Deflationary pressures have generally receded, but monetary accommodation should continue where inflation remains stubbornly below target levels.
Growth-friendly fiscal measures, especially where there is fiscal space, can support demand where that is still needed and contribute to expanding supply and reducing external imbalances. All countries have opportunities for structural reforms that can raise potential output as well as resilience to shocks, although specific reform priorities differ across economies.
Avoiding the damage from protectionist measures will require a renewed multilateral commitment to support trade, paired with national initiatives that can help workers adversely affected by a range of structural economic, the IMFC stated ina communique
The International Monetary and Financial Committee, the IMF`s steering body, repeated its past commitments on currency exchange rates.
"We will refrain from competitive devaluations, and will not target our exchange rates for competitive purposes," the IMFC said in a statement.
"We will also work together to reduce excessive global imbalances by pursuing appropriate policies. We are working to strengthen the contribution of trade to our economies," it said.
The IMFC noted that while the world economy may be gaining momentum, there is no guarantee that global econo0myis out of the woods.
On the question of countries safeguard and nurture the global recovery, it said, trade has been an engine of growth, promoting impressive per capita income gains and declines in poverty throughout the world, especially in poorer countries. But its benefits have not always been equally shared within countries, and political support for trade will continue to erode unless governments step up to invest in their workforces and aid the adjustment to dislocations.
Instead, IMFC pointed to an IMF paper, co-authored with the World Bank and the World Trade Organization, surveys possible policy approaches. Importantly, such measures not only support trade, they aid adjustment to a range of structural changes-including those from rapid technology change.
The IMF communique said international growth and stability rely on multilateral collaboration across a range of problems that spill over national borders - not just trade. The challenges include financial oversight, tax avoidance, climate, disease, refugee policy, and famine relief. Historically, inclusive cooperative approaches to interdependence have worked best. National policymakers, however, must do the hard work to ensure that the gains from harnessing interdependence, which are substantial, are broadly shared.