The G20, IMF and Global Imbalances: The Policymakers’ Perspective
In the lead-up to the Cannes G20 Summit in 2011, Barry Eichengreen observed: ‘the G20 is unlikely to protect us from the risks posed by disorderly unwinding of imbalances’. In the Brookings/Centre for Global Innovation and Governance joint project, taking soundings of media coverage after G20 Leaders’ Summits, the conclusion from the Los Cabos Summit in June 2012 was, ‘at Los Cabos, the long-term issue of global rebalancing did not seem to receive priority attention.
This is not surprising, notwithstanding that global imbalances are purportedly a key issue for the G20. Examining the causes and consequences of global imbalances has been fertile ground for economists and academics. However, this debate has largely failed to capture the attention of the policymakers. This is not because external imbalances are of no concern under any circumstance, or because there is no plausible case for a policy response. Rather, it is because it is difficult for the policymaker to win the domestic political debate needed to implement often contentious policy changes and reforms by saying that the measures will lead to a ‘reduction in global imbalances’.
In order to get economic measures accepted, the policymaker will approach the issue from a domestic viewpoint, in particular the impact on achieving economic and jobs growth. For the International Monetary Fund (IMF) to have more traction in convincing countries to implement policies required to lower current account imbalances and related vulnerabilities, they need to focus more on how such measures will benefit the domestic interest of the countries concerned.
KeywordsGross Domestic Product International Monetary Fund Current Account Current Account Deficit Fiscal Consolidation
- Blanchard O, Milkes-Ferretti GM (2011 March) (Why) Should current account balances be reduced. IMF Staff Discussion NoteGoogle Scholar
- Blustein P (2012 June) A flop and debacle: inside the IMF’s global rebalancing acts. CIGI PapersGoogle Scholar
- Dadush U, Suominen K (2011) Is there life for the G20 beyond the global financial crisis? J Glob Dev 2(2)Google Scholar
- Deutisch A, Dyer G (2010) Obama calls for G20 to act on imbalances. Financial Times, 9 November 2010Google Scholar
- Grenville S (2009 September) External Imbalances and the G20. Lowy Institute for International PolicyGoogle Scholar
- Garton P, Sedgwick M, Shirodkar S (2010) Australia’s current account deficit in a global imbalances context. Treasury Economic Roundup, (1):29–50Google Scholar
- IEO Background Paper. (2009 December) IMF performance in the run-up to the financial and economic crisis: bilateral surveillance in selected IMF member countriesGoogle Scholar
- IMF (2005 April) World economic outlook, globalization and external imbalancesGoogle Scholar
- IMF (2011) G20 Mutual assessment process: from Pittsburgh to Cannes—IMF Umbrella ReportGoogle Scholar
- IMF (2012 July) Pilot external sector reportGoogle Scholar
- IMF (2013) Global prospects and policy challenges, meetings of G20 Finance Ministers and Central Bank Governors February 15–16, Washington DCGoogle Scholar
- King M (2011 February) Global Imbalances: the Perspective of the Bank of England. Banque de France Financial Stability ReportGoogle Scholar
- National Perspectives on Global Leadership (2012) Soundings Series No 7: Los Cabos, Centre for International Governance and Innovation, CanadaGoogle Scholar
- Obstfeld M, Rogoff K (2009 October). Global imbalances and the financial crisis: products of common causes. Federal Reserve Bank of San Francisco Asia Economic policy conferenceGoogle Scholar
- Pisani-Ferry J (2012 June) Macroeconomic coordination: what has the G20 achieved. Think Tank 20Google Scholar
- Rhee C (2011 September) From Seoul to Cannes; What has the G20 Delivered so far. FPQGoogle Scholar
- Vox (2011) Research. www.voxeu.org/article/g20-and-global imbalances. Accessed 26 June 2011Google Scholar