WASHINGTON (Reuters) - Downside risks to global growth have increased and the weak economic outlook will make achieving world development goals more difficult than in the past, the head of the International Monetary Fund said on Tuesday.
IMF Managing Director Christine Lagarde said she hoped world leaders would adopt a United Nations agenda for sustainable development over the next 15 years at a summit in New York from Sept. 25-27.
The new Sustainable Development Goals will aim to eradicate hunger and extreme poverty, reduce inequality within and between states, achieve gender equality, improve water and energy management, and take urgent action to combat climate change.
Lagarde said implementing the goals, which will replace the Millennium Development Goals that helped focus attention on the needs of poor nations for the past 15 years, would be a challenge.
“It would be a lot easier if the world was cruising at 5.5 (percent), 6 percent global growth than it is at the moment,” she said at a Brookings Institution event. The IMF, which is due to release updated economic forecasts in October, in July forecast global growth of 3.3 percent this year and 3.8 percent in 2016.
Downside risks to the global economic outlook have increased, including from lower commodity prices, a realignment of monetary policy and slower growth in China, Lagarde said.
“The slowdown of Chinese growth was predictable, predicted, but has consequences and probably more spillover effects in the region in particular than was anticipated,” she said.
In a discussion note, IMF staff said building solid public finances, investing in education, cutting energy subsidies and deepening financial markets are among policies countries should follow to support sustainable development.
Structural reforms would help make best use of resources, including policies to increase agricultural productivity, boost infrastructure spending and invest more in education, especially for girls.
Developing countries could create space for spending more on development and social goals by increasing tax revenues and cutting wasteful spending.
Finally, cutting energy subsidies and properly calibrating energy prices would help the environment and also create more fiscal space, the paper said, noting that raising energy prices would yield average per country revenues worth 4 percent of gross domestic product.
Reporting by Krista Hughes; Editing by Andrea Ricci and Meredith Mazzilli