Wed | Aug 15, 2018

Lagarde: Public investment needed for growth

Published:Monday | October 13, 2014 | 12:00 AM

Marie Hill, Gleaner Writer

International Monetary Fund (IMF) Managing Director Christine Lagarde is calling for the world's governments to increase job training as one means of cutting unemployment and weak wage growth and to also invest in public infrastructure as a means of boosting overall growth.

The push for growth is necessary as the world continues to experience economic recovery that is "brittle, uneven, and beset by risks", said Lagarde, during an address at Georgetown University in the United States just before the recent meeting of the 188-nation IMF and its sister lending agency, the World Bank.

The IMF head said that six years after the financial crisis, global economic recovery remained persistently disappointing and would only regain momentum through improved government policies.

Lagarde called for policymakers to pursue reforms to break the cycle of middling growth and ease conditions for more than 200 million people who remain unemployed around the world - about 75 million of whom are young people.

Statistical Institute of Jamaica data show that as at April 2014, the unemployment rate in Jamaica was 13.6 per cent. Within this group, 60 per cent of females, age 20 to 24, were unemployed, while 25 per cent of males in the same age range were without jobs.

Anaemic levels of growth

Locally, the last report of the Economic Programme Oversight Committee (EPOC) indicated anaemic levels of growth in Jamaica, citing the IMF's lowered growth estimate from 1.4 per cent for 2014-15 to 1.1 per cent in its fifth-quarter report. EPOC, however, concluded that the economy continues to improve as per expectations, adding the caveat that the prolonged drought may also slow growth in the second quarter of the fiscal year.

Colin Bullock, director general at the Planning Institute of Jamaica (PIOJ), noted in late September that while the IMF programme in Jamaica was necessary, it was still not sufficient for "unlocking robust and inclusive growth" within the economy. Although growth has returned, he said, economic recovery remains fragile due to global and domestic uncertainties.

Lagarde said public investment in infrastructure development and training may boost growth in the medium term, indicating that US$6 trillion would be needed globally for electricity grids, roads, and other infrastructure over the next 15 years.

She called for reforms of labour markets and increased spending on infrastructure.

"There is a recovery, but as we all know ... the level of growth and jobs is simply not good enough," Lagarde said. "The world needs to aim higher and try harder."