Global economic growth remains subdued

The International Monetary Fund (IMF) on Saturday said the global economic recovery was continuing but growth remains subdued, as it called on the US to take urgent action to address short-term fiscal uncertainties. "The US needs to take urgent action to address short-term fiscal uncertainties. The Euro area should build on progress toward banking union and further reduce financial market fragmentation," the International Monetary and Financial Committee said in a communique issued at the end of its 28th meeting.

"Japan should implement medium-term fiscal consolidation, and structural reforms to invigorate growth," it said. A communique issued on Saturday after the G-20 finance ministers' and central bank governors' meeting, which among others was attended by Finance Minister P Chidambaram, had also said the US needs to take urgent action to address short-term fiscal uncertainties.

Noting the global recovery is continuing, IMF said growth remains subdued and downside risks persist, with some new risks emerging.

"There are encouraging signs of improving activity in advanced economies, while growth in many emerging market economies has moderated. Growth has generally remained resilient in low-income countries," the IMF communique said.

"We will build on recent progress and implement more ambitious and coherent policies for strong, sustainable, and balanced growth, while reducing market volatility," it said. IMF said reducing market volatility requires carefully managing multiple transitions, including a shift in growth dynamics, normalising global financial conditions, achieving fiscal sustainability, a rebalancing of global demand and moving to a more stable global financial system, the communique said.

On advanced economy, it said, recovery in the US had gained ground, stimulus measures have induced a recovery in Japan, the euro area is emerging from recession, and in some other advanced economies including the UK, growth was already picking up.

Accommodative monetary policies have helped support global growth while maintaining stable prices, and remaining appropriate, and should be accompanied by credible fiscal policies and further financial sector and structural reforms, it noted. Growth in emerging market economies, IMF said, continues to account for the bulk of global growth, but has moderated, in a few cases to a more sustainable level.

Fundamentals and policy frameworks are generally stronger, but domestic structural challenges remain, the communique said.