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IMF / WEO INFRASTUCTURE AND TRADE
STORY: IMF/ WEO INFRASTRUCTURE AND TRADE
TRT:1:40
SOURCE: IMF
RESTRICTIONS: NONE
LANGUAGE: ENGLISH / NATS
DATELINE: 30 SEPTEMBER 2014, WASHINGTON DC
1. Wide shot press,conference
2. SOUNDBITE (English) Abdul Abiad, Research Department, IMF:
“What these findings suggest is that in countries with infrastructure needs, now is a good time for an infrastructure push. Borrowing costs are low and demand is weak in many advanced economies. And there are infrastructure bottlenecks that are constraining growth in many emerging market and developing economies. The increase in public investment would support demand in the short term, something that is needed and would also help raise potential output in the long term. Furthermore, debt-financed projects could have large output effects without increasing the public debt to GDP ratio if clearly-identified needs are met through efficient investment. In short, public infrastructure could pay for itself if it is done correctly.”
3. Cutaway, audience
4. SOUNDBITE (English) Marco Terrones, Research Department, IMF:
“The global imbalances have narrowed and the main driver of this narrowing has been the decline in demand in deficit economies. It is clear that if there is a recovery in the demand of these countries, the sum of the imbalances will reverse and the deficits will start widening. In our forecast, the closing of gaps does not suggest that the imbalances are going to widen substantially.”
5. Wide shot, press conference
In the current global environment of sub-par growth, there is a strong case for increasing public investment in countries where conditions are right, finds a new study released in the IMF’s World Economic Outlook.
The study, which is published in the IMF’s October 2014 World Economic Outlook report, examines the macroeconomic effects of public investment in a large number of countries. The findings suggest that in countries with infrastructure needs, now is a good time for an infrastructure push.
Many advanced economies are stuck in a low growth and high unemployment environment, and borrowing costs are low. Increased public infrastructure investment is one of the few remaining policy levers to support growth.
In many emerging market and developing economies, infrastructure bottlenecks are putting a brake on how quickly these economies can grow.
“What these findings suggest is that in countries with infrastructure needs, now is a good time for an infrastructure push. Borrowing costs are low and demand is weak in many advanced economies. And there are infrastructure bottlenecks that are constraining growth in many emerging market and developing economies. The increase in public investment would support demand in the short term, something that is needed and would also help raise potential output in the long term. Furthermore, debt-financed projects could have large output effects without increasing the public debt to GDP ratio if clearly-identified needs are met through efficient investment. In short, public infrastructure could pay for itself if it is done correctly,” said Abdul Abiad, the lead author of the report.
In a second report released Tuesday, the IMF said that global trade imbalances have shrunk from their peak eight years ago, which is largely a result of lower demand from consumers in countries with larger trade deficits.
“The global imbalances have narrowed and the main driver of this narrowing has been the decline in demand in deficit economies. It is clear that if there is a recovery in the demand of these countries, the sum of the imbalances will reverse and the deficits will start widening. In our forecast, the closing of gaps does not suggest that the imbalances are going to widen substantially,” said Marco Terrones, the lead author of the report.
Terrones said that the reduction in imbalances has reduced the risk to the global economy.
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