The IMF on Friday called on the world's largest economies to address stalling growth and productivity and worrisome current accounts imbalances, saying the global recovery is not guaranteed to continue. In a report on the economic health of Group of 20 nations, the International Monetary Fund said group members had made substantial progress in spurring recovery after the Great Recession, with growth stabilizing and unemployment falling.
But problems persist, according to the report, as potential growth rates in more than half of G20 economies were estimated at two percent or lower. Current accounts imbalances in the Britain and the United States, which run persistent trade deficits, could spur protectionism, it added.
The IMF and World Bank are due to convene annual meetings next week with member states, during which G20 representatives will also gather. "The sustainability of growth is not assured," the report said. "The cyclical recovery has firmed but productivity growth remains low."
A steep, prolonged drop in commodities prices, notably oil, was weighing on growth in emerging economies, such as Argentina, Saudi Arabia, Brazil and South Africa as well as Mexico and Turkey. Meanwhile, advanced economies, such as Japan, South Korea, Australia as well as France and Italy, were also forecast to grow at below-potential rates while suffering from below-target inflation and weak demand. "While sovereign debt levels have now broadly stabilized, little progress has been achieved in bringing them down," the report said.
The report called for renewed efforts to reduce deficits and the "uncomfortably high" public debt levels in Spain, Japan, the United States and Brazil. "China should build on recent efforts to reduce financial vulnerabilities in the private sector," the report said, alluding to the rapid expansion of credit in the world's second-largest economy.
The report said collective action by G20 members would promote the largest gains in GDP growth, adding about 3.5 percent to member countries' growth by 2028 under IMF forecasting models.
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