Policy Makers are Confused About the Way Forward

With the China market slowing down in August, the international world of finance is feeling its impact even now. The policy makers are now worried about signs of the global economic growth slowing down. The need of the hour is to find growth engines that can help to take the global economy forward. The topic was highlighted in the annual meeting of the International Monetary Fund. The meeting saw a conglomeration of top finance officials across the world confront a reality of a slowing down global economy and how to arrest the symptoms before it becomes apparent.

Evidences of a spluttering global economy

There are several points that showcase evidence of a global economy whose growth rate is slowing down:

  • Emerging countries like Brazil and China are seen as the main propellers of global economic growth. However, these countries have been contracting in their demand capacity as well as showing signs of slowing down. The capacity to take on more is seen without supporting infrastructure or framework for economic growth. As a result, these economics are showing weak growth rates and there are less signs being seen of the economies moving up their demands within a short span of time.
  • Sluggish growth indications are bringing in more complications. For instance, emerging countries which have reduced their poverty levels are unable to maintain the social gains as a result, in developed countries the policies that will help to push the economies forward seem to be missing.

These are some of the signs that are troubling the policy makers, which were discussed at the annual meeting. The governor of the Bank of England pointed out that the global economy is suffering from vicious circles that are hard to come out unless the right policies are taken up to propel the different countries towards growth and demand.


Impacts and consequences

The impact of uncertain policies in global finance is falling on the investment sector. As investors are not assured by strong policies at the helm of their country or abroad, there is hesitancy to make further and significant investments in new or expanded areas. As pointed out in the article about currency wars, Beijing is taking steps to tweak its exchange rate which is pegged against the dollar. This was first done in August when there was a series of repercussions seen across the different economies. However, the underlying reason and the main factors which are bringing on the sluggishness of the global economic growth need to be looked at.

There was considerable unease at the IMF meeting as the policy makers are still uncertain about the steps to take. The tweaking of the currency rates is still being seen as the only way to encourage growth through global demand and supply, but if the slowdown of demand becomes a global phenomenon, this theory might still fail to push the sputtering economy along.

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