BERLIN (Reuters) - The International Monetary Fund is likely to nudge up its growth forecast for the global economy this week and this means it is high time for policymakers to dial back their ultra-loose monetary stimulus, German government officials said on Monday.
Policymakers from around the world will gather in Washington this week for the IMF and World Bank annual meetings.
The Fund currently predicts global growth of 3.5 percent in 2017 and 3.6 percent in 2018. “I think it’s safe to say that the IMF will revise its forecast slightly upwards,” said one senior government official, speaking on condition of anonymity.
The discussions will also provide the opportunity to look back at the priorities of Germany’s G20 presidency.
“If you look at our ...presidency, you can see that some of it has been adopted by the IMF in its recent reports,” the senior official said.
The official pointed to the priority of consolidating national budgets, cutting debt and making economies more resilient against future shocks through structural reforms.
The IMF is also backing Germany’s G20 initiative to improve conditions for private investments in African countries, another official said, adding that the number of participating countries would rise to ten from seven.
Germany will hand over the G20 presidency to Argentina in December.
The gathering in Washington is also the last such meeting for outgoing Finance Minister Wolfgang Schaeuble who, following national elections last month, is expected to become head of Germany’s lower house of parliament.
For years, Schaeuble has pushed for central banks to end their ultra-loose monetary policy and for governments to stop piling up debt. This line was echoed in an open letter published by his chief economist, Ludger Schuknecht, on Monday.
“It would be an excellent time this autumn to get a strong commitment from (the meeting in) Washington to put an end to excessive debts and loose policies,” Schuknecht said.
“If we want to press ahead with what is really needed, we need an exit from the extraordinary now.”
Schuknecht said the IMF in its latest review had rightly pointed to increasing risks to financial stability resulting from over-expansionary monetary policy.
“Search for yield by investors around the world, risk of fiscal dominance looming for central banks, misallocation in the real economy all put our common goal of strong, sustainable, balanced and inclusive growth at risk,” he said.
Reporting by Michael Nienaber and Gernot Heller; editing by John Stonestreet