More international co-operation needed to sustain world recovery
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With the world economic recovery showing encouraging signs of strength, the need for more co-operation and policy co-ordination among countries becomes more prominent than ever.
At the Spring Meetings of the International Monetary Fund (IMF) and the World Bank which kicked off on Saturday in Washington, it is widely agreed that the global recovery has evolved better than expected.
After experiencing the phases of panic, action and relief, the world now is "entering the fourth phase" of "rebuilding," said Dominique Strauss-Kahn, IMF Managing Director, at the press conference after the International Monetary and Financial Committee (IMFC) meeting on Saturday.
However, the recovery is uneven, with faster growth in some emerging markets while more sluggish recovery in advanced economies like European Union and Japan, according to the latest World Economic Outlook and the Global Financial Stability Report ( GFSR) released by the IMF earlier this week.
In line with this multi-speed recovery are different challenges in different countries. As IMF pointed out, mounting debt burdens and high unemployment in advanced economies risk prolonging credit weakness, while rapidly-growing emerging markets face surging capital inflows that would result in asset bubbles.
Just as the damage of financial and economic crisis varies in different regions, so are the solutions to post-crisis problems. While countries focus on their own problems, they should be careful to avoid hurting others, analysts believe.
Aggressive fiscal stimulus measures have been taken and successful in reversing the free fall of the world economy. But at the same time, insufficient coordination of the stimulus has also contributed to the new surge in the global financial imbalances.
"Governments of the major economies will need to improve coordination of continued stimulus as well as subsequent 'exit strategies' while retaining a counter-cyclical policy framework," said Sha Zukang, UN under-secretary-general for Economic and Social Affairs, in a statement to the IMFC meeting.
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