Thursday, April 25, 2013

IMF — back off fiscal tightening if it is cramping growth, and focus on medium term debt reduction

Major advanced economies need to balance supporting activity and grappling with old risks from structural weaknesses that weigh on growth. A slow but fairly steady private sector led recovery is in the making in the U.S., while recovery remains elusive in the euro area and Japan. 

  •  While sentiment has improved, the top priority for the U.S. is to raise the debt ceiling in a timely manner and agree on a credible medium-term fiscal roadmap to bring down debt. 
  • In the euro area, monetary policy should remain accommodative and fiscal consolidation be properly paced. The foundations of monetary union should be made more secure. National authorities should fix frayed banking systems and rebuild competitiveness as required. Japan needs to balance upfront stimulus with more ambitious plans to bring down debt and structural reforms to put growth on a permanently higher plane. 
  • In its advice and analysis, the Fund will seek the right balance between supporting growth (including through monetary easing) and removing the millstone of high private and public debt.
IMF
Managing Director’s Global Policy Agenda – April 2013

Contradictory messaging. Read anything you want into it.

4 comments:

Ralph Musgrave said...

Tom,

Thanks for drawing attention to that inane drivel from the IMF. When I’ve stopped laughing at it, I may do a post about it on my own blog.

Ignacio said...

"Contradictory messaging", seems about how the IMF has been going on the last times.

You must keep a balance between the promotion of 'disaster capitalism' and 'lack of adequate demand' (and credit growth!) to maximize corporate and capitalist profits.

paul said...

"Contradictory messaging" from the IMF is a feature not a bug…

Content-free discourse for the most part, which has become the norm in just about every (official) area.

F. Beard said...

Translation: "You're killing the hosts, dummies! And you might piss them off enough that they decide they don't need us parasites anymore!"