Ed Miliband’s call for an emergency G20 summit in September is backed up by an important year-long project undertaken by the IMF, writes Cormac Hollingsworth.
Today Ed Milliband called (£) for an emergency meeting of the G20 in September, to restart the global recovery from a co-ordinated collapse in demand around the world. His call is backed up by an important year-long project undertaken by the IMF to outline an upside and downside for the world economy over the five years.
• The OECD on structural reforms;
• The ILO on labour market policies;
• The WTO on trade policies;
• The UNCTAD; and
• The World Bank on progress in promoting development and poverty reduction.
The IMF say (p. 2, pdf) of the MAP:
“[Its] well-designed, collaborative policy actions across the G-20 would produce better outcomes for all, including significant strides in global demand rebalancing.”
Significantly, the IMF concluded (p. 2, pdf) that:
“Driven by strong and credible consolidation, public finances would be returned onto a sustainable trajectory in G-20 advanced economies.”
The downside scenario of a lack of coordination is also clear: global output would be lower by 3% in 5 years’ time – $2.25 trillion lower – 23 million jobs worldwide would be lost and 60 million people would fall into poverty.
The financial market panic of the last month reflects this downside scenario.
Co-ordinated G20 activism would provide a significant upside: global GDP up 2.5% – $1.5 trillion higher in 5 years – eight million more jobs created in advanced economies, 21 million in emerging Asia and the rest of the world, and 33 million people lifted out of poverty.
But there is a darker warning (p. 3, pdf) within the IMF report that makes his call even more urgent:
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“Reactive policies in the downside scenario are shown to be less effective.”
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