Washington: The International Monetary Fund warned in a communique on Saturday that while economic growth in developed countries had strengthened, some emerging nations were being hit by weaker commodity prices and exports.
With the United States poised to hike interest rates, the IMF member nations said it was essential that moves to “policy normalisation” were accompanied by effective communication of changes to reduce risks of spillovers.
“The possibility of lower growth potential is becoming a more relevant challenge over the medium term,” the IMF’s steering committee said in a communique during the Fund’s spring meetings in Washington.
Those meetings conclude on Sunday and have taken place amid growing concerns cash-strapped Greece will fail to reach agreement with its European Union and IMF creditors. At the same time, risks of a stronger dollar and low commodity prices have hit emerging markets as China’s blistering economic growth has slowed.
Low inflation remains a concern for many developed economies despite signs the European Central Bank’s quantitative easing programme has boosted Europe’s ailing economy, and the communique called for accommodative monetary policy to be maintained where needed.
“Global imbalances are reduced from previous years, but a further rebalancing of demand is still needed,” the communique said. That appeared to echo US concerns over Germany’s huge current account surplus.
While there has been little sign at the meetings of a renewed flare-up in the “currency wars” despite a surge in the value of the dollar against the euro and yen, China’s growing economic clout has overshadowed the talks.
Beijing has touted its own development bank, a rival to the established Washington-based institutions, and is pushing for the inclusion of its currency in a key IMF basket to reflect its economic might.
