The Annual Meetings of the International Monetary Fund discussed measures that could help support a recovery in growth in the global economy and resilience against risks. An important point for Estonia in the longer term was that growth is likely to be slower in Russia.

Discussions in the IMF’s International Monetary and Financial Committee focused on global growth, which has been poorer than expected, and on ways it can be accelerated and strengthened. In spring most of the recommendations were for short-term monetary and fiscal policy support, but now there were louder calls to adopt economic policies that would have a long-term effect. All countries, including those in the euro area, need to carry out structural reforms in order to strengthen growth, and infrastructure investment needs to be increased in many countries.

“Countries that have carried out important reforms have clearly benefited from them. In the euro area these were particularly the countries that were deeper in the crisis”, said the Governor of Eesti Pank, Ardo Hansson. “Structural reforms are especially important right now as favourable conditions have been created for an economic recovery by short-term monetary policy measures. However, relying only on short-term stimulation could lead to new risks arising, particularly in the financial sector.”

The IMF’s International Monetary and Financial Committee also noted an increase in risks and considered that low interest rates are creating challenges and that risk-taking has increased in financial markets. The main risks to the euro area were identified as slow growth over a long period and inflation, and the impact of geopolitical tensions.

An important topic for Estonia during bilateral talks at the Annual Meetings was the conflict between Ukraine and Russia. Ardo Hansson said that the impact the conflict has had on several economies, including Estonia’s, has so far been modest. Despite this, long-term consequences should be considered, as the economic relations between Russia and the advanced economies will probably not recover in the same form as before.

The Annual Meetings of the members of the IMF and the World Bank are held twice a year. The autumn Annual Meetings were held this year on 10–12 October in Washington, DC. Estonia was represented in the Annual Meetings by Governor Ardo Hansson and Deputy Governor Madis Müller from Eesti Pank and by Vice Chancellor of the Ministry of Finance, Märten Ross.

For further information:
Viljar Rääsk
Eurosystem
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