The International Monetary Fund (IMF) has tasked emerging and developing economies to diversify their economies to boost future growth and resilience.
The Economic Counsellor and Director of Research department of the IMF, Maurice Obstefeld, disclosed this during a press briefing on the World Economic outlook at the ongoing World Bank/IMF spring meeting in Washington D.C.
Obstefeld said while some of the emerging economies can expect longer term growth rates comparable to pre-crises rates, many commodity exporters will not be so lucky, despite some improvement in the outlook for commodity prices.
He said: "at the IMF, we have been saying for a while, that the current cyclical upswing offers policy makers an ideal opportunity to make long term growth stronger, more resilient, and more inclusive. The present good time will not last for long, but sound policies can extend upswing while reducing the risk of a disruptive unwinding."
He further posited that countries need to rebuild fiscal buffers, enact structural reforms, and steer monetary policy cautiously in an environment that is already complex and challenging.
The IMF further noted that the prospect of trade restrictions and counter-restrictions threatens to undermine confidence and derail global growth prematurely.
"While some governments are pursuing substantial economic reforms, trade disputes risk diverting others from the constructive steps they would need to take now to improve and secure growth prospect," Obstefeld said.
It will be recalled that major economies are flirting with trade war at a time of widespread economic expansion trade.
The recent intensification of trade tensions started in early March with the United States announcement of its intent to levy steel and Aluminium tariffs for national security reasons.
The announcement has fed into several bilateral negotiations aimed at reducing U.S. trade deficits with individual trading partners.
Obstefeld noted that public optimism about the benefits of economic integration has been eroded over time by long-standing trends of job and wage polarization, coupled with persistent sub-par growth in median wages, adding that "Many households have seen little or no benefit from growth."
He said governments need to rise to the challenges of strengthening growth, spreading its benefits, increasing workers' sense of security in the face of impending technological changes that are more widely, broadening economic opportunity through investments in people, and could radically transform the nature of work.
"Fights over trade distract from this vital agenda, rather than advancing it," he added.