CORRUPTION is an economic and social plague that makes it hard for countries to take the right collective measures thus inhibiting economic dynamism, says IMF managing director Christine Lagarde. And Lagarde says in too many countries, growth has failed to lift the prospects and livelihoods of ordinary people.
Meanwhile, Lagarde says global debt, both public and private, has reached an all-time high of US$182 trillion, almost 60 per cent higher than in 2007.
In her speech at the IMF headquarters on Monday titled: ‘Steer, Don’t Drift’: Managing Rising Risks to Keep the Global Economy on Course’, Lagarde said in an age of rapid technological change where digitalisation and artificial intelligence were sweeping across industries, there was need for higher levels of public trust.
“Corruption is an economic and social plague that makes it hard for countries to take the right collective decisions. This is bound to inhibit economic dynamism, which further undermines trust and sets in motion a vicious cycle,” Lagarde said.
She indicated that in July, the IMF projected 3.9 per cent global growth for 2018 and 2019, but that this outlook has since become less bright.
“First the good news. Global growth is still at its highest level since 2011 when economies were rebounding post-crisis. Unemployment is still falling in most countries. And the proportion of the global population living in extreme poverty has dropped to a new record-low of less than 10 per cent…in other words, the world continues to experience an expansion that holds the promise of higher incomes and living standards,” she said.
“So is everything fine? Well, only up to a point. For most countries, it has become more difficult to deliver on the promise of greater prosperity because the global economic weather is beginning to change. What do I mean by that? A year ago, I said, ‘the sun is shining – fix the roof’. Six months ago, I pointed to clouds of risk on the horizon. Today, some of those risks have begun to materialise.”
Lagarde added that fixing the system also means making it fit for the future.
“Here again, we could use flexible trade agreements to unlock the full potential of e-commerce and other trade-able services, such as engineering, communications, and transportation,” said Lagarde.