Opening the annual meetings of the International Monetary Fund (IMF) and World Bank, IMF chief Horst Koehler said the recovery had to be nurtured with increased vigilance and decisive economic policies. Achieving a balanced recovery, and a return to sound and sustained global growth, in particular, requires broadening our focus from the short-term requirements to the serious underlying problems that many of our economies continue to face, Mr Koehler told the 184 members of the fund and World Bank.
The annual meetings of the IMF and World Bank began on Tuesday and events surrounding them have been going on for more than a week, punctuated by a gathering of group of seven finance ministers last Saturday.
Tasked with promoting economic stability, Mr Koehler said, the collapse of global trade talks in Cancun under the weight of divisions between rich and poor nations on how to open agricultural markets had not helped global confidence.
He urged the sides to overcome differences and resume talks, promising IMF assistance to countries who may face problems caused by more liberal trade markets.
More than ever, success will depend on the leadership of the major industrial countries, and agriculture remains the key to unlocking decisive progress. he said.
Head of Germanys Bundesbank Ernst Welteke said there had been improvement in the world economy but cautioned that policy makers faced an unfamiliar road ahead with inflation and interest rates at their lowest levels in decades. New bubbles must be avoided. Therefore, central banks must remain vigilant, he cautioned.
For his part, Mr Koehler urged collective efforts to tackle a widening global trade imbalance and rising government debts the biggest risks to a recovery. Ensuring an orderly resolution of these imbalances is in all our interests, Mr Koehler said. The way forward is through multilateral dialogue and cooperation.
The US and Europe are pushing developing Asian economies, especially booming China, to allow their currencies to strengthen and help ease trade imbalances. Since the Asian crisis of the 1990s, countries in the region have increased exports to boost economic growth and build up foreign exchange reserves. (Reuters)