The IMF/WB Annual Meeting Concludes,
with Political Economic Issues Lingering On
Hi all, amidst ceaseless discussion on faltering world economies, today I would like to share with you the discussions and conclusions at the IMF/WB annual meeting in Tokyo. As for the Financial Stability Board (FSB) meeting held concomitantly with the IMF/WB, please refer to the previous post in this blog.
* Related blog posts;
– The Joint Annual Meeting of IMF and WB in Tokyo (1): https://financialservicescommission.wordpress.com/2012/10/11/the-joint-annual-meeting-of-imf-and-wb-in-tokyo/
– Meeting of Financial Staiblity Board in Tokyo (1): https://financialservicescommission.wordpress.com/2012/10/23/meeting-of-the-financial-stability-board-in-tokyo-1/
While the meeting was held on 9-14th of October, the main agenda was ‘deterioration of advanced economies and its impact on world economy (surprise, surprise!)’. Representatives from European and the US were particularly urged to address their debt issues.
Reflecting the wide-shared disappointment and worries about dragging and indecisive talks over how to solve European sovereign debt crisis, or balance the US economy, Christine Lagarde, the chief of IMF, commented as follows. “There was no objection to the recommendation that we gave to the membership, which was a-c-t.” With emphasis on each syllable of ‘act’, she sounds very decisive, no? However, the conflicting views on how to act was scarcely manifested. While Christine Lagarde advocated giving more time for Greece to meet the Troika’s target, the German’s finance minister Wolfgang Schaeuble reiterated the necessity to stick to the initial plan.
Well, if there was anything that looked slightly better, the emerging countries were deemed to have relatively better outlooks than advanced nations. Particularly, as for Brazil, China, and India, there were no signs of ‘hard landing’. But this is hardly a consolation. According to the IMF chief economist Olivier Blanchard, these countries will grow slower than recent years.
Moreover, countries including Korea expressed critical opinions on global economic governance. Jae-Wan Bahk, Korea’s finance minister, pointed out a lack of leadership in the world economy as a reason for disharmony and inefficiency in solving the global financial crises. In a similar vein of criticism, Choong-Soo Kim, the governor of Bank of Korea, questioned the fairness and transparency within the IMF. True, the new chief of World Bank, Jim Yong Kim, was Korean American – whose appointment seemed to appease the anger of developing countries towards the old tradition of white males from advanced countries occupying the top positions at global financial institutions. However, that does not mean that any fundamental reforms were taken place to allow more voice and influence of emerging nations. The same view was strongly supported by BRICS countries as well.
This year’s conference was controversial in another sense: the absence of China’s top government officials. The Chinese finance minister, Xuren Xie, and the central bank governor, Xiaochuan Zhou did not attend the meeting, but sent their deputies instead. Though this cancellation of attendance was explained as a matter of ‘conflicting schedule’, this move was widely interpreted as protest against Japan’s nationalization of Diaoyudao Islands (or Senkaku Islands in Japanese).
Perhaps this year’s IMF/WB meeting would be one of the most glaring examples of how politics and economics could just not be separated – from the conflicting views on how to address advanced economies’ problems to criticisms on world global governance, and even territorial issues.