'Geopolitical risks' to the global economy

Chancellor Angela Merkel met with the leaders of the world's major economic organizations in Berlin on Wednesday. Managing Director of the International Monetary Fund (IMF) Christine Lagarde (photo left), Secretary General of the Organization for Economic Co-operation and Development (OECD) Jose Angel Gurria, Director General of the World Trade Organization (WTO) Roberto Azevedo, Director General of the International Labor Organization (ILO) Guy Ryder and World Bank President Jim Yong Kim were present. They discussed global economic issues.

At the joint press conference after their meeting, Merkel said that current "geopolitical risks" ensured that "growth remains fragile" and that they needed to be overcome. The risks included those presented by "Islamic State" (IS) and the conflict in Ukraine, she said, calling them "enormous challenges."

IMF outlook

IMF chief Lagarde said that major economies were seeing better news thanks to the lower price of oil, currency changes and low interest rates, which encouraged investment.

"For once in a long time, there is clearly some relatively better news on the horizon of the advanced economies. And this has not happened in a while," Lagarde said.

"We clearly have a rebound of the US economy, an improvement and good growth showing in the UK, and the euro area is also now turning the corner," the IMF leader noted. She added that "European growth is probably going to turn better than expected."

Lagarde said the low price of oil was considered by the IMF "as a net positive for the global economy," despite its differing effect on various economies.

She cited the three factors helping to spur the world economy: "So we've got three factors that are acting as boosters to the global economy and particularly to those advanced economies that combine the benefit of lower price of oil, currency valuations ... and the lower cost of investment."

Programs and innovation

ILO General Secretary Ryder said there was a strong need for programs to tackle youth unemployment. OECD chief Gurria said it was important to focus on innovation in both the industrial and service sectors. WTO director Azevedo said world trade was not growing as much as was possible, or desirable.

World Bank President Kim proposed new financing for development projects, which could be obtained by eliminating subsidies on fossil fuels, he said. He also warned that the world was completely unprepared in the event of another epidemic, such as the Ebola outbreak in West Africa.

The meeting comes ahead of the June G7 meeting in Bavaria in June.

jm/gsw (dpa, epd, AFP)