Dombret: increase growth potential through structural reforms

Member of the Bundesbank Executive Board Andreas Dombret has encouraged taking ad-vantage of the currently healthy state of the global economy to increase the growth potential and resilience of national economies through structural reforms. In the run-up to the Annual Meeting of the International Monetary Fund (IMF), he also warned against increasingly inward-looking economic policies. This could further weaken long-term drivers of growth, said Dombret.

The IMF governors of all 189 member states will gather for the Annual Meetings of the IMF and the World Bank Group, which take place in Washington DC in mid-October. The Bundesbank exercises Germany’s financial rights and obligations in the IMF and is represented on the IMF’s Board of Governors by Bundesbank President Jens Weidmann and – as his deputy – Executive Board member Andreas Dombret.

Comfortable financial position

In Washington, the experts from the IMF will, among other things, provide their outlook for the global economic situation. In their latest forecast from July, they predicted growth of 3.5 per cent for 2017 and 3.6 per cent for the coming year. Dombret expects that this upswing will gain even more momentum. "However, demographic change and weak productivity growth are weighing on many countries' longer-term outlooks for growth," he cautioned.

A further topic for the meeting concerns the Fund’s future financial requirements. Dombret de-scribed the IMF’s financial position as "still comfortable". The Bundesbank believes that the IMF’s primary source of financing should be through the quotas provided to the Fund by its member states. "This is the only way to properly align member countries’ quota shares and voting rights," said Dombret. Regarding the current quota review, Dombret referred to the blocking minority of the United States. An early signal of whether the United States would approve a quota increase is therefore vital for a constructive discussion, he believes.

Final G20 meeting under German presidency

Coinciding with its Annual Meeting, the IMF will issue its World Economic Outlook (WEO) on 10 October. In the WEO, published twice a year, the IMF presents its forecasts for global economic development. The IWF experts assess the current risks to financial stability in the Global Finan-cial Stability Report, which will be released on 11 October alongside the Fiscal Monitor.

On the sidelines of the meeting in Washington, G20 finance ministers and central bank governors will also convene. To see out this final meeting under German presidency, German Federal Finance Minister Wolfgang Schäuble and Bundesbank President Jens Weidmann will be holding a press conference on Friday, 13 October. From 1 December 2017, Argentina will chair the group of the twenty largest industrialised and emerging economies.