The leaders of the International Monetary Fund, the World Bank and the World Trade Organisation on Friday issued a warning about the economic and social risks of austerity programmes in a “call to action” designed to boost growth and fight protectionism.
Expressing concern about the weakness of economic activity and rising unemployment, the IMF’s Christine Lagarde, the World Bank’s Robert Zoellick and the WTO’s Pascal Lamy joined the heads of eight other multilateral and regional institutions in calling for policies to create jobs, tackle inequality and green the global economy.
“The world faces significant and urgent challenges that weigh heavily on prospects for future growth and on the cohesion of our societies,” said the statement by the global issues group of the World Economic Forum. It was published ahead of the forum’s annual meeting in Davos next week, amid concerns that 2012 will see the global economy flirt with recession as a result of the eurozone crisis.
“Our shared objective is the strengthening of growth, employment and the quality of life in every part of the world,” said the statement. “But entering 2012, we worry about: decelerating global growth and rising uncertainty; high unemployment, especially youth unemployment, with all its negative economic and social consequences; potential resort to inward-looking protectionist policies.”
In addition to Lagarde, Zoellick and Lamy, the signatories were Mark Carney of the Financial Stability Board, Margaret Chan of the World Health Organization, Angel Gurría of the Organisation for Economic Co-operation and Development, Donald Kaberuka of the African Development Bank, Haruhiko Kuroda of the Asian Development Bank, Luis Alberto Moreno of the Inter-American Development Bank, Josette Sheeran of the United Nations World Food Programme, and Juan Somavia of the International Labour Organisation. The forum said it was the first time the heads of the world’s major institutions had come together in such a way.
Reflecting the IMF’s concern about over-aggressive deficit reduction programmes, the joint statement said governments should “manage fiscal consolidation to promote rather than reduce prospects for growth and employment. It should be applied in a socially responsible manner.”
The 11-strong group said it wanted to see a comprehensive action plan that could be agreed and implemented at the meeting of the G20 gathering of developed and developing nations in Mexico in June.
“We call on leaders to devote the necessary political energy to deliver concrete actions to exit the crisis and boost growth. Every country, working through its regional economic organisations and development banks and through the international financial and UN institutions, has a role to play.”