IMF releases global report card

On 22 April 2009, the International Monetary Fund (IMF) released two semi-annual reports, the World Economic Outlook: Crisis and Recovery (April 2009) and the Global Financial Stability Report: Responding to the Financial Crisis and Measuring Systemic Risks (April 2009).

According to the joint foreword to the reports, ‘global activity is projected to contract by 1.3 per cent in 2009. This represents the deepest post-World War II recession by far. Moreover, the downturn is truly global: output per capita is projected to decline in countries representing three-quarters of the global economy. Growth is projected to re-emerge in 2010, but at 1.9 per cent it would be sluggish relative to past recoveries.’

The joint foreword notes that ‘[t]he difficult and uncertain outlook argues for continued forceful action both on the financial and macroeconomic policy fronts to establish the conditions for a return to sustained growth. Whereas policies must be centred at the national level, greater international operation is needed to avoid exacerbating cross-border strains.’

It goes on to state: ‘At the root of the market failure that led to the current crisis was optimism bred by a long period of high growth and low real interest rates and volatility, together with a series of policy failures. These failures raise important medium-run challenges for policymakers. With respect to financial policies, the task is to broaden the perimeter of regulation and make it more flexible to cover all systemically relevant institutions. Additionally, there is a need to develop a macro prudential approach to both regulation and monetary policy.’

The full summary version reports are available at www.imf.org