By Julyssa Lopez
The global economy’s recovery is underway, but it remains “too modest, uneven and not enough to create jobs around the world,” IMF Managing Director Christine Lagarde said Thursday during an interview with journalist Maria Bartiromo at the George Washington University’s Lisner Auditorium.
Ms. Lagarde’s comments came during the IMF's annual spring meetings last week, marking the second year in a row the events have been held on GW’s campus. The university also hosted the IMF’s annual meetings in fall 2013 and 2014.
Ms. Lagarde’s visit gave GW students the chance to ask her questions directly and provide input on some of the most pressing international economic issues. Additionally, GW’s Events and Venues team gave students the opportunity to volunteer as ushers and greeters at several of the meeting events.
When the IMF released its economic forecast earlier this week, the organization predicted a 3.5 percent growth in the global economy in 2015 and a 3.8 percent growth in 2018. The numbers are steady on a global level, but irregular when examined at the national level in individual economies. The IMF lowered its expectations for the U.S. economy, for example, and set its expectations for the country’s economic growth at 3.1 percent—down from its January estimate of 3.6 percent.
Still, Ms. Lagarde said, the U.S. and other advanced economies are projected to expand more rapidly than other markets. Once touted as the largest contributors to the global economy, emerging economies still make up 70 percent of growth this year, but they are slowing down and represent a range of uneven patterns. Some economies, like Russia’s, have flat-lined in the face of geopolitical tensions. Others, like the Chinese market, have lost steam after years of rapid growth.
“In many places, you have the combination of lower demand, the general slowing down we have seen and the threat of ‘low, low, high, high’: low inflation, low growth, high unemployment and higher debt,” Ms. Lagarde said.
Besides emerging economies, the IMF has had its eye on one advanced market facing extreme debt—Greece owes the coalition of 188 countries an estimated $1 billion, one payment of which is due next week. Ms. Lagarde explained that the IMF would not allow late payments from Greek officials and stressed that loan money belongs to the international community. She encouraged the Greek government to push forward with fiscal reforms rather than miss payments—something that no advanced market has ever done.
“When you think of loans by the IMF, it’s not as if it’s IMF money,” she said, “All the countries of the world, some of which are in dire and hard conditions themselves, are lending.”
The managing director didn’t speak firmly only about Greece. She urged, as she did in 2013, the United States to act on IMF reforms proposed in 2010 that would adjust the organization’s lending quota and governance structures. Congress missed its 2014 deadline to pass the reforms.
Ms. Lagarde said these reforms are at the top of her list for discussion at this year’s spring meetings. The meetings also will focus on reviewing Special Drawing Rights, which are assets IMF members can exchange for usable currencies, and provide finance ministers a forum to discuss issues facing the global economy as oil prices fall.
“If policymakers can actually agree to work together a bit better… and listen to each other and focus on issues such as inclusive growth, sustainable growth, the role of women, the effect of income equality… that’s the moment when the conversation starts picking up,” she said.