The global economy is projected to grow approximately 3% this year, with the pace of growth continuing its downward trajectory since April 2019, as the growth outlook remains uncertain and subject to elevated downside risks on the back of trade tensions, policy uncertainty, geopolitical risks, limited policy space, high and rising debt levels, and heightened financial vulnerabilities, according to the communiqué of the 40th meeting of the International Monetary and Financial Committee (IMFC).
The IMFC committed to refrain from competitive devaluations and targeting exchange rates for competitive purposes, recognising that excessive volatility or disorderly movements in exchange rates can have adverse implications for economic and financial stability.
Commenting on the policy tools necessary to mitigate risk, enhance resilience, and shore up growth, the IMFC communique stated: “In line with central banks’ mandates, monetary policy should ensure that inflation remains on track toward, or stabilises around targets, and that inflation expectations remain anchored. Central bank decisions need to remain well-communicated and data-dependent. We will continue to monitor and, as necessary, tackle financial vulnerabilities and risks to financial stability, including with macro-prudential policies.”
The IMFC communique added: “We will advance structural reforms to lift growth, employment, and productivity; enhance resilience; and promote inclusion. We reaffirm our commitment to strong governance, including by tackling corruption.
"We will advance policies that foster innovation and more competitive and flexible markets, and strive to address challenges from demographic shifts. We will provide opportunities for all people to contribute to economic activity and share its benefits, and effectively assist those bearing the cost of ongoing transitions.”
The IMFC emphasised the need to reduce global imbalance, implement financial sector reform, and pointed to free, fair, and mutually beneficial goods and services trade, and investment, as key engines for growth and job creation.
In the communique from its 40th meeting, the IMFC added: “We are working toward a modern and globally fair international tax system, particularly taxation related to digitalization, and will address harmful tax competition, artificial profit shifting, and other tax challenges. We will continue to address correspondent banking relationship withdrawal and its adverse consequences.”
The IMFC has also committed to supporting the 2030 Sustainable Development Goals (SDGs).