Domestic policy efforts are country-specific whereas to reach the target of 2% global growth in the next five years greater synergy would be required in the international policy coordination, finance secretary Arvind Mayaram said while garnering support from fellow emerging markets like China and Indonesia, a finance ministry statement said.
Notwithstanding huge stimulus measures by various countries, global recovery has been uneven and there are concerns that winding down of the US Federal Reserves easy monetary policy could adversely impact emerging markets. To increase global growth, we not only have to look at the positive impact on country growth and spillovers but also reduce negative spillovers and risks to the world economy as a whole, he said.
The meeting happened on the sidelines of the annual IMF and World Bank meetings. A case was also made for the International Organisations (IOs) to include negative spillovers in their models which focus only on the positive spillovers. Mayaram said that currently the spillover analysis done by the IOs and the growth assessment are completely delinked.
He reminded that back in 2008 at the Washington Summit, immediately in the aftermath of the Lehman Brothers bankruptcy, it was agreed to that a broader policy response was needed, based on closer macroeconomic cooperation, to restore growth, avoid negative spillovers and support EM economies and developing countries. Further, he brought to the forefront the situation of increasing asset prices in EMs despite lower inflation and growth that could trigger asset price bubble, which could pose potential risk to the global growth.