WASHINGTON, DC – The global economy in 2013 remained suspended between the poles of hope and uncertainty. While recovery gained momentum, particularly in some advanced economies, the world economy is not yet flying on all engines – and is likely to remain underpowered next year as well.
The International Monetary Fund’s latest forecast puts global GDP growth at 3.6% in 2014, which is decent, but still below potential growth of around 4%. In other words, the world could still generate considerably more jobs without fueling inflationary pressure.
This means that the IMF’s members – whether advanced, emerging-market, or developing economies – have more work to do. A strong and lasting recovery that lifts all countries and all peoples requires policymakers to press ahead on all fronts – fiscal, structural, and financial. At the same time, the international community must reinvigorate its efforts to strengthen cooperation through the G-20, the IMF, and other actors. Indeed, only through such collaboration can we overcome the lingering impact of the global crisis.
We have certainly avoided the worst-case scenario (Great Depression II) over the past five years, thanks to the efforts of global policymakers – particularly the determination of central banks to keep global interest rates low and to support the financial system, coupled with fiscal stimulus in some countries. But the time has come to push further, including by using the room created by unconventional monetary policies to implement structural reforms that can jump-start growth and create jobs.