With buoyant financial markets and a long-awaited cyclical recovery in manufacturing and trade underway, world growth is projected to rise in 2017. However, to sustain this new-found momentum, policymakers will need to provide support where it is still needed, tackle structural impediments, and work to keep a long list of downside risks in check. The right policies will not only restart the positive feedback effects among growth, investment, and trade—they will also ensure that the enormous benefits of global economic integration are widely shared and negative impacts mitigated. The panel will discuss the current interplay among economic integration, technology advances, and growth and ways in which countries can work within and together to help ensure a durable recovery in which the benefits are widely shared and those carrying most of the burden of adjustment are supported.
Rana Foroohar, Global Business Columnist, Financial Times
Rana Foroohar is Global Business Columnist and an Associate Editor at the Financial Times, based in New York. She is also CNN’s global economic analyst. Her book, “Makers and Takers: The Rise of Finance and the Fall of American Business” (Crown), about why the capital markets no longer support business, was shortlisted for the Financial Times McKinsey Book of the Year award in 2016. Prior to joining the FT and CNN, Foroohar spent 6 years at TIME, as an assistant managing editor and economic columnist. She previously spent 13 years at Newsweek, as an economic and foreign affairs editor and a foreign correspondent covering Europe and the Middle East. During that time, she was awarded the German Marshall Fund’s Peter Weitz Prize for transatlantic reporting. She has also received awards and fellowships from institutions such as the Johns Hopkins School of International Affairs and the East West Center. She is a life member of the Council on Foreign Relations. Foroohar graduated in 1992 from Barnard College, Columbia University.
David Lipton, First Deputy Managing Director, IMF
Mr. David Lipton has been First Deputy Managing Director of the International Monetary Fund in 2011. Before coming to the Fund, he was Special Assistant to the President and Senior Director for International Economic Affairs at the White House. Previously, he served as Under Secretary for International Affairs at the U.S. Treasury.
Masood Ahmed, President, Center for Global Development
Masood Ahmed has been Director of the Middle East and Central Asia Department since November 1, 2008.
Martin Feldstein, Professor, Harvard University
Martin Feldstein is the George F. Baker Professor of Economics at Harvard University and President Emeritus of the National Bureau of Economic Research. He served as President and CEO of the NBER from 1977-82 and 1984-2008. From 1982 through 1984, Martin Feldstein was Chairman of the Council of Economic Advisers and President Reagan's chief economic adviser. He served as President of the American Economic Association in 2004. In 2006, President Bush appointed him to be a member of the President's Foreign Intelligence Advisory Board. In 2009, President Obama appointed him to be a member of the President's Economic Recovery Advisory Board.Dr. Feldstein is a member of the American Philosophical Society, a Corresponding Fellow of the British Academy, a Fellow of the Econometric Society and a Fellow of the National Association of Business Economists. He is a Trustee of the Council on Foreign Relations and a member of the Trilateral Commission, the Group of 30, the American Academy of Arts and Sciences, and the Council of Academic Advisors of the American Enterprise Institute
Raghuram Rajan, Professor, Chicago Booth School of Business
Raghuram Rajan is the Katherine Dusak Miller Distinguished Service Professor of Finance at Chicago Booth. He was the 23rd Governor of the Reserve Bank of India between September 2013 and September 2016. Between 2003 and 2006, Dr. Rajan was the Chief Economist and Director of Research at the IMF. He was the President of the American Finance Association in 2011 and is a member of the American Academy of Arts and Sciences. He has won several awards: the inaugural Fischer Black Prize for the best finance researcher under the age of 40 in January 2003 by the American Finance Association, the Infosys prize for the Economic Sciences in 2012, the Deutsche Bank Prize for Financial Economics in 2013, Euromoney Central Banker Governor of the Year 2014, and Banker Magazine (FT Group) Central Bank Governor of the Year 2016.
Axel Weber, Chairman, UBS
Axel A. Weber was elected to the Board of Directors (BoD) of UBS AG at the 2012 AGM and of UBS Group AG in November 2014. He is Chairman of the BoD of both UBS AG and UBS Group AG. He has chaired the Governance and Nominating Committee since 2012 and became Chairperson of the Corporate Culture and Responsibility Committee in 2013. Mr. Weber was president of the German Bundesbank between 2004 and 2011, during which time he was also a member of the Governing Council of the European Central Bank, a member of the Board of Directors of the Bank for International Settlements, German governor of the International Monetary Fund, and a member of the G7 and G20 Ministers and Governors. He was a member of the steering committees of the European Systemic Risk Board in 2011 and the Financial Stability Board from 2010 to 2011.
Panelists discussed the current interplay among economic integration, technology advances, and growth and ways in which countries can work within and together to help ensure a durable recovery in which the benefits are widely shared and those carrying most of the burden of adjustment are supported.
Key Points:
- Global growth is projected to rise in 2017, but uncertainties and vulnerabilities remain. Lipton reported that the WEO forecast point that recovery is gaining momentum this year, with continued uncertainties over the medium term. Weber pointed out that although growth should pick up this year, it was expected to stabilize at a low level, as long-term structural impediments—low inflation, and the low interest environment—continue to constrain growth Feldstein noted that the upcoming fiscal package in the US would change the incentives to save and invest, leading to higher capital accumulation and growth in the US. Ahmed believed that most EMDCs are in a better situation this year compared to last year, but vulnerabilities in some of them are rising.
- To sustain this recovery, structural impediments need to be tackled and downside risks kept in check. Lipton believed that some countries still have to overcome crisis legacies while others need to support growth; almost all countries need to reverse the decline in productivity. Weber was of the view that financial sector reforms must be completed to strengthen the financial system and reduce the risk of future crises. Ahmed and Rajan underlined that rising private and public debt ratios are increasing vulnerabilities, particularly for some EMDCs. Ahmed and Weber stressed that risks from adverse demographics trends, especially in Europe, have to be addressed.
- Cooperation is needed to preserve the good aspects of globalization. Lipton highlighted that globalization is particularly important for EMs to converge to AE living standards. However, the adverse effects of globalization in AEs need to be addressed. Rajan and Weber believed that unequal and unfair distribution of gains from technological changes and trade could make globalization politically unsustainable.
- Policies to make growth work for all. Panelists underlined that the suitable policies can restart the positive feedback between growth, investment, and trade, and ensure that the benefits of global economic integration are widely shared while their negative impacts are mitigated. Rajan stated that investment in infrastructure was the best way to distribute income, especially in EMDCs, as it distributes productivity gains across the population and regions. Lipton emphasized the benefits of policies aimed at gender and financial inclusion, and of labor and product markets reforms.
Quotes:
“To maintain the momentum of the recovery, some countries have unfinished work to do with adjustments to overcome the legacy of the crisis; other countries have to provide more support to growth; and almost everyone need to strengthen growth over the medium term and revert the decline of productivity to make growth work for everyone.” David Lipton, First Deputy Managing Director of the International Monetary Fund
“There is a need to cooperate to preserve the good aspects of globalization. Clearly there are some side effects which led to discontent, and we need to deal with those.” David Lipton, First Deputy Managing Director of the International Monetary Fund
“Sustaining this growth momentum requires quite difficult political economy decisions.” Masood Ahmed, President of the Center for Global Development
“Tax cuts are tax reforms, especially if you are a tax payer.” Martin Feldstein, George F. Baker Professor of Economics at Harvard University and President Emeritus of NBER
“Some people have in mind a “bicycle sense” of the global system, unless you pedal forward, you are going to fall off … There are some instances where it makes sense to pause, take stock, figure what are the things don’t work and then go forward.” Raghuram Rajan, Professor of Finance, University of Chicago, Booth School of Business
