WASHINGTON — The global economy has recovered from the 2008 crisis and now is growing, but certain regions – mostly in Latin America, the Middle East and parts of Africa are still struggling and need special attention of international community, a senior International Monetary Fund official said Tuesday.
At the start of a week-long IMF and World Bank conference, Maurice Obstfeld, IMF economic counselor and research director, said that the IMF has raised its growth projects for the global economic growth to 3.6 percent for 2017and 3.7 percent for 2018, up 0.1 percent for both years.
The rates could have been higher, but the IMF predicted a potential reduction of productivity during the two-year period.
Countries with developing economies and, emerging markets that are closed to advanced economies, especially low-income commodity exporters, are mostly in the Middle East and North and sub-Saharan Africa” face challenges from civil or political unrest, Obstfeld said.
The IMF that “fully 43 emerging market and developing economies” will have lower per capita productivity growth rates than those of advanced economies over the next five years, he said.
“These economies are diverging rather than converging,” said Obstfeld. Normally, emerging markets should have higher per capita growth than advanced economies.
According to the 2017 World Economic and Financial Survey released by the International Monetary Fund, the IMF, World Bank and other multilateral financial organizations should encourage countries’ policy makers to tailor and strengthen their policies for to correct development imbalances in those regions.
The IMF report recommended a combination of structural, fiscal, and monetary policy changes to help developing economies.
For the more advanced of the developing countries which have financial resources, the report recommended further investment in infrastructure and education, and stabilizing their economies so another recession would have less effect.
Mark Weisbrot, co-director of the Center for Economic and Policy Research, wrote a post for Buzzfeed criticized the IMF’s monetary policy made by IMF, saying it hurts developing economies.
IMF has detailed “the risks to developing countries from the (Federal Reserve) raising interest rates, as this can cause crises when capital moves away from them to the U.S. and high-income countries,” he wrote. “But low-and-middle income countries have very little voice in the 189-country organization; it is run by the U.S. and its high-income country allies.”