IMF calls for collective action to boost global growth

The global economy has entered a dangerous phase and policy makers need to take concerted action to tackle the challenges, said the International Monetary Fund ( IMF) in a statement released Monday. "Collective action can put the global economy on a path to strong, sustainable, and balanced growth," the IMF said in the statement on global economic prospects and policy challenges, which was proposed to the Group of 20 (G20) finance ministers and central bank governors meeting in Paris on October 14-15. "Even assuming that policies prevent downside risks materializing, projections are for a anemic recovery in major advanced economies and a cyclical slowdown in emerging economies," said the Washington-based international financial institution. It predicted that global growth will slow down to about 4 percent in 2011-2012. "Downside risks are severe," said the fund, suggesting policy makers in major economies to take action along three key fronts. This includes well calibrated fiscal adjustment to reassure markets; liquidity provision in the euro area to avoid deeper dislocation and relieve funding strains; and building banks' capital buffers in Europe. The IMF said that advanced G20 economies must restore fiscal sustainability through credible medium-term consolidation plans. While emerging G20 economies need to focus on responding to spillovers from moderating growth in advanced economies and heightened global risk aversion in financial markets.