As global economic recovery efforts slow, world financial leaders pledge to give it boost. Is it sustainable?

The global recovery effort to bring world economies back to pre 2008 standards has cooled off recently, and that’s been unsettling to many, especially in the IMF. Now, the IMF is speaking out, and publicly announcing renewed efforts to help enhance global aid initiatives, and give certain economies a push to get them back on track. Much of Europe is still struggling to cut deficits, and growth has stalled, while recovery funds have trickled down amidst worries of sustainability. However, as far as economic troubles go, the main area of concern now is what’s going on in West Africa.

At the IMF’s annual fall meeting, the issue was raised about the impact of the recent outbreak of the Ebola virus in West Africa, and the economic damage that’s occurred there as a result. Global markets can, and will be affected by an economic crisis in the region, and ripple effects into similar emerging markets could be disastrous, if aid isn’t increased immediately. Because of this, the IMF has committed $130 million in aid, available to Guinea, Liberia, and Sierra Leone. They have also stated that more would be available if needed, and they are prepared to act with quickness to help soften the damage. The World Bank has also pledged recovery funds, to the tune of $400 million in interest-free loans to fight the virus.

According to a recent article in the Boston Globe:

 The IMF called increasing economic growth an ‘‘utmost priority’’ during the fall meeting of the IMF and World Bank. In a closing statement Saturday from the steering committee of the 188-nation IMF, the finance leaders also committed to making the necessary structural changes that would boost growth.

This echoes concerns voiced by many world leaders and economists, who see a slow global economy as getting even slower if the Ebola crisis isn’t stopped soon. They also made it loud and clear that they think there is a need for surplus economies to do a better job of fixing holes in their demand modules, which in turn can slow down growth in countries looking to do business with them. They specifically named Germany as holding the responsibility for this in Europe, and singled out China and Japan as baring some responsibility to improve recovery efforts in their region as well.

According to many economists, Germany, China, and Japan need to improve/extend their government spending to encourage growth, and in turn, help neighboring economies benefit from the spoils. The IMF believes that by injecting more spending into surplus economies, you can stimulate growth in slow areas, and increase your trade demand, which will then benefit the global economy as a whole.

They also discussed the need for many countries to improve pensions and health programs, in order to alleviate costs to citizens, and allow them more income to put back into the economy. This is a bit of paradigm shift for the organization, which tends to favor private investment to help alleviate public problems. That’s not to say that they aren’t encouraging that in this case, but the message is just being delivered a little differently.

The bottom line is that we are approaching a crisis point with the outbreak of Ebola, and the slowdown of global economic recovery. It is of the utmost importance to inject life back into world markets, before they fall behind further. If Ebola paralyzes Africa, the economic consequences will be huge, not to mention the humanitarian consequences. This week, the IMF pledged action, and with the support of its member countries, put economic recovery as a top priority. Only time will tell if it works. Time that is too valuable to waste.

Avatar of Delray Wannemacher

About Delray Wannemacher

Delray Wannemacher is President and CEO of Interlinked and its two subsidiaries InterlinkedTV and FSXinterlinked. Interlinked is a global multi-dimensional investment platform that connects investors, companies and partners by leveraging technology, media and physical events to achieve its goals. Delray has over 20 years of experience serving small and micro-cap companies, primarily in Internet, software, finance and communications. He works with startup companies, helping them achieve their goals as efficiently and effectively as possible. Delray has also successfully built four companies of his own.

View all posts by Delray Wannemacher

Leave a Reply

Your email address will not be published. Required fields are marked *