New Challenges Facing the Global Economy

Location: Meeting Halls A&B, HQ1-3-430A&B

Moderator

Rana Foroohar
Columnist, Financial Times

Rana Foroohar is Global Business Columnist and an Associate Editor at the Financial Times, based in New York. She is also CNN’s global economic analyst. Her book, “Makers and Takers: The Rise of Finance and the Fall of American Business” (Crown), about why the capital markets no longer support business, was shortlisted for the Financial Times McKinsey Book of the Year award in 2016. Prior to joining the FT and CNN, Foroohar spent 6 years at TIME, as an assistant managing editor and economic columnist. She previously spent 13 years at Newsweek, as an economic and foreign affairs editor and a foreign correspondent covering Europe and the Middle East. During that time, she was awarded the German Marshall Fund’s Peter Weitz Prize for transatlantic reporting. She has also received awards and fellowships from institutions such as the Johns Hopkins School of International Affairs and the East West Center. She is a life member of the Council on Foreign Relations. Foroohar graduated in 1992 from Barnard College, Columbia University. She lives in Brooklyn with her husband, the author John Sedgwick, and her two children.

Panelists

David Lipton
First Deputy Managing Director, IMF

David Lipton assumed the position of First Deputy Managing Director of the International Monetary Fund on September 1, 2011. On March 28, 2016, he was reappointed for a second five-year term beginning September 1, 2016. Before coming to the Fund, Mr. Lipton was Special Assistant to the President, and served as Senior Director for International Economic Affairs at the National Economic Council and National Security Council at the White House. Previously, he was a Managing Director at Citi, and also served in the Clinton administration as Under Secretary of the Treasury for International Affairs — and before that as Assistant Secretary. Mr. Lipton earned a Ph.D. and M.A. from Harvard University in 1982 and a B.A. from Wesleyan University in 1975.

Join the conversation via #GlobalEcon

Overview

A moderated discussion with David Lipton, First Deputy Managing Director of the IMF, which will cover key new issues facing the global economy, including normalization of monetary policy, digitalization, and other topical issues. How should policy makers be thinking about these new challenges and their potential impact? Come join the discussion.

Seminar Report

Contributor: Luigi Briamonte, Secretary's Department

Moderator: Rana Foroohar, Columnist, Financial Times

Speaker: David Lipton First Deputy Managing Director, IMF

The global economy is facing several issues, including normalization of monetary policy, trade, technology, and erosion of trust. Panelists elaborated on how policy makers should be thinking about these challenges and their potential impact.

Key Points:

Normalization of monetary policy. The recovery has been supported by accommodative monetary policy, which have provided liquidity, lowered interest rates and supported the creation of credit but has increased public and private debt levels at the same time. Going forward, without adjustments, there is a risk of a lack of policy space in the event of a future crisis. In this context, structural reforms and investment in infrastructure are essential to increase potential output and create room for maneuver.
Trade. The level of conflict on trade has not been as high in years and the parties involved need to find common ground. The countries that have benefited the most from globalization should review their trade practices and see whether any violation of rules has taken place and correct it. On the other hand, countries that are promoting unilateral, defensive policies should refrain before an escalation damages the global economy.
Technology. New technology can have positive and negative effects. For example, automatization of manufacturing might increase the share of capital in income. The challenge is to choose the right balance and to take advantage of the positive effects of new technology while compensating those who are adversely affected and avoiding overregulating the use of new technology. At the same time, policies should address concerns associated with workplace displacement, change in monetary transmission mechanisms, privacy, cyber-attacks, and anti-trust issues. The challenge in the medium term will be to create an agenda to address such concerns.
Trust. There is a general erosion of trust in many countries, particularly in the US and Europe. This erosion of trust is generated by the perception of inaction of governments to face the effects of globalization and technological change. There is a tendency towards “decentralization of trust”—people tend to trust more at the local level, including local authorities, CSOs, and grass-root movements.

Quotes:

“Globalization has created dislocation, which is leading to discontent, which is leading to political change, which also affects the issue of trust.” David Lipton

“Growth should be inclusive, people should feel that there are opportunities and that globalization is fair.” David Lipton