"Managing Director Christine Lagarde outlined long-term trends facing the global economy and implications for the Fund in a keynote speech at the plenary session of the IMF-World Bank 2013 Meetings.
Even while grappling with a range of difficult transitions in the aftermath of the global financial crisis, Lagarde pointed to the longer-term trends and “frontier risks” facing the IMF’s 188 countries.
“Over the next generation, the rate and reach of change is likely to be even greater than before. With that, the needs of our members will change. So too must the Fund.”
In the next decade the share of emerging and developing economies in global GDP will increase from about half to nearly two-thirds, Lagarde stated, setting the stage for a world where economic power will be far more dispersed across all regions.
The IMF must mirror this shift and be more representative, Lagarde said. The institution is already moving in this direction, Lagarde added, referring the 2010 governance reforms, which once implemented, would provide a platform on which to build further.
As emerging and developing countries grow and converge, their financial interconnections will become deeper and more complex.
Deeper integration will fuel growth, but it will not be without risk, Lagarde warned. “Experience teaches us a vital lesson: greater financial integration raises the probability and size of financial crises.”
Lagarde underlined other long-term trends—demographic shifts, income inequality, and environmental sustainability—that will affect growth and stability. Where these issues affect the macroeconomic health of the IMF’s member countries, they must be “part our work,” she said.
In all these new areas of risk, Lagarde said that it would be important for the IMF to cooperate more effectively with other institutions and help to focus global attention on specific issues".
Christine Legarde
IMF-World Bank 2013 Annual Meetings
