(g) International Monetary Fund The relevance of national policies to promote growth

Our countries have joint programmes with the International Monetary Fund to facilitate economic growth and the reduction of poverty.

Thus, with supply side factors no longer driving global growth, we must reassess our expectations of what monetary and fiscal policies can achieve. If actual growth is already close to potential growth, then continuing the current fiscal and monetary stimulus will only create more bubbles, exacerbate sovereign debt problems, and, by reducing the pool of global savings available to finance private investment, undercut long term growth prospects.

Also, despite a decline in interest rates, monetary policy has remained stringent and the lira has appreciated, slowing export growth.

The inequitable world financial, monetary and trade systems must be reformed in order to promote economic growth in the developing countries.

Europe s monetary unification of the 1990 s was supposed to be accompanied by fiscal convergence and harmonization. When budgets move in different directions, pressures shift to regional policy (to redistribute income) and to monetary policy (to boost growth).

When I consider the European economy, the ECB s failure to provide more monetary support for economic growth appears to be directly analogous to Europe s disastrous monetary policies in the 1930 s. The political consequences could be similarly devastating.

According to the International Monetary Fund, during the first decade of this century, annual global growth averaged 3.7 , compared to 3.3 in the 1980s and 1990s. In the last four years, growth has averaged 3.4 .

The Transitional Government began a programme of macroeconomic reforms, which is continuing under the Poverty Reduction and Growth Facility of the International Monetary Fund.

Declining economic growth strengthens the temptation to loosen monetary policy. But in today s deflationary environment, typical monetary expansion alone can do little to help the real economy, because the money either remains idle or fuels asset bubbles and capital outflows.

For example, the US monetary base rose at an annual rate of 9 from 1985 to 1995, and then slowed to 6 in the next decade. This decelerating monetary growth was accompanied by a slowdown in the pace of inflation.

The developed economies should better integrate the international dimension into their macroeconomic and monetary policies, since these have a crucial impact on world growth and development.

This is not to say that sudden normalization of monetary policy is a good idea. But, if large scale investment and reform programs were initiated as complements to unconventional monetary policy measures, the economy could move onto a more resilient growth path.

24. In the years when the country was signing agreements with the International Monetary Fund, GDP achieved minimal levels of growth or modest declines, e.g., a minimal increase of 0.27 in 1984 followed by negative growth of 2.6 in 1985.

BRUSSELS The International Monetary Fund now estimates a 30 risk of deflation in the eurozone, and growth figures within the monetary union continue to disappoint. But policymakers seem trapped in a cat s cradle of economic, political, and legal constraints that is preventing effective action.

Monetary Mystification

But monetary policy typically focuses on domestic recovery. And, though unconventional measures have reduced financial instability, their effectiveness in countering widespread deflationary pressures or restoring growth remains dubious.

According to the International Monetary Fund (IMF), the average annual growth rate for the continent is 4 5 per cent, and per capita incomes are on the rise.

Domestic monetary policy has become the first and last line of defense against growth slowdowns and financial panics, enabling policymakers to avoid pursuing other important, but far more difficult measures. Using monetary policy to compensate for deficiencies in other policy areas constitutes an institutional breakdown monetary policymakers are not necessarily getting it wrong, but they are constrained by the configuration of other policies.

All efforts to stimulate job creation or economic growth with easy money will merely boost price growth, offsetting any effect on unemployment. Monetary policy must therefore focus solely on hitting inflation targets, and central bankers should be exonerated of any blame for unemployment.

Given Russia s economic fundamentals, Putin s diminished popularity might appear surprising. The International Monetary Fund s forecast of 4 growth in 2011 and subsequent years puts Russia well behind China and India, but far ahead of average growth rates in the rich G 7 countries.

The most important factor is the acceleration in India s economic growth, which the International Monetary Fund projects will exceed 7.5 through 2020. For decades, India suffered from what some called the Hindu rate of economic growth a little more than 1 per year.

The political temptation is always there to resort to inappropriate monetary expansions that bring temporary relief at the expense of harming longer term growth. Institutional independence has allowed the central bank to conduct its monetary policy in a consistent manner, insulated from short term political influences.

But the willingness of China s new leadership to initiate another round of growth securing stimulus depends on what rate of GDP growth Li can tolerate. With China s leaders having offered no indication that they will change current monetary policy, some economists have estimated that Li will not act until GDP growth falls below 7 .

The Monetary Cosmopolitans

China s Monetary Sterilization

International Monetary Fund

International Monetary Fund

International Monetary Fund

International Monetary Fund

Countries now seem to think that monetary policy measures are their only option. But, whereas fiscal stimulus boosts growth at home and abroad, enabling mutual reinforcement through world trade, monetary policy is guided primarily by domestic goals, and, in the short term, one country s gain can be another s loss.

In the context of weakening growth, the Stability and Growth Pact will face a severe new test. And, just as important, reforms aimed at ensuring greater flexibility of markets still lag behind what is needed to exploit fully the advantages of the single monetary policy.

The obvious change is that economic growth opportunities mushroomed, owing to greater monetary stability, disinflation, and natural resource wealth. Better macroeconomic policy led to faster GDP growth, which required financing and motivated some insiders to forego pernicious maneuvering that would scare away new outside investors.

In April 2010, the International Monetary Fund s World Economic Outlook projected 1.8 annual GDP growth in Germany and the Netherlands in 2013. In October of last year, the IMF lowered its 2013 growth forecast for Germany to 0.9 and to 0.4 for the Netherlands.

But this will require a shift in the ECB s attitude. Europe needs a monetary policy that views aiding employment growth in northern Europe as more important than continental price stability.

The price stability mandate has been trumped by concerns about growth. The fear is that tightening monetary policy to bear down on inflation could snuff out the faltering economic recovery.

The overall economic performance of countries from the West African Monetary Union zone grew by only 2.8 per cent in 2004 against a projected growth rate of 4.1 per cent.

According to International Monetary Fund (IMF) forecasts, its gross domestic product (GDP) would grow by an estimated 36 per cent in 2006 the highest GDP growth rate in the IMF countries.

First, it is important to acknowledge that weak aggregate demand and anemic economic growth, not an acceleration in the labor displacement rate, explains the slow jobs growth of the last decade. Under these conditions, monetary policy should remain accommodative and further fiscal austerity should be eschewed.

China s Monetary Policy Surprise

China s Monetary Policy Choice

The New Monetary Disorder

IMF International Monetary Fund

International Monetary Fund (IMF)

N. International Monetary Fund