Developing, emerging economies would be growth drivers: FM

Observing that the global economy appears to be strengthening gradually after suffering a setback, the Finance Minister, Mr Pranab Mukherjee, has said developing countries and emerging economies are expected to continue as growth drivers.

“Developing countries and emerging economies are expected to continue as growth drivers for the world economy. The fact, however, is that even here growth has decelerated.

“The global economy is too interconnected for them to be insulated from the knockdown impact of developments in advanced economies,” he said in his address at the G24 Finance Ministers’ meeting.

This presents both a challenge as well as an opportunity for organisations such as the G24 to take a lead role in creating a platform for exchange of ideas and to develop a consensus to arrive at solutions that are not only effective in the short run but also sustainable in the long run, he said.

Mr Mukherjee said the need for concerted action among the world nations for facing volatility in the global economy was well articulated in our last meeting in September 2011 at this very venue.

Noting that the role of the international financial institutions (IFIs) today deserves to be viewed in this light, Mr Mukherjee said there are serious apprehensions regarding the governance structure of these IFIs, adequacy of their resources as well the flexibility of their lending procedures.

“These apprehensions have strengthened the trend of setting up new and regional financial mechanisms and institutions where the voice of these nations is heard, and adequate finance is forthcoming,” he said.

Mr Mukherjee said the present global juncture presents an opportunity for the G24 to devise strategies to enhance its effectiveness in the global policy-making process.

“All international organisations today recognise the fact that none of them can be an active participant in the global economy unless and until EMDCs are taken on board and given a greater role,” he said.

Mr Mukherjee said Finance Ministers of G24 countries are meeting at a time when the global economy appears to be strengthening gradually after suffering a setback.

“Although actions by Euro zone countries and the ECB have stabilised the situation and calmed the market somewhat, underlying structural problems remain and downside risks remain significant as manifest in recent movements in bond yields,” he said.

“Volatility in commodity prices, threats of disruptions to supply chains and high oil prices have added to global uncertainty and impacted businesses across the globe, slowing the recovery in both advanced and emerging economies,” he said.

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