International Monetary Fund chief Michel Camdessus opened the annual IMF-World Bank meeting on a somber note Tuesday, calling unemployment levels “intolerable” and saying economic progress has bypassed the poor.
Addressing hundreds of finance officials and central bankers, Camdessus painted a bleak picture of the world economy and said promising developments of recent years have failed to bear fruit.
“Many expectations born of developments only a little while ago--the end of the Cold War, the growth of the industrial economies . . . and the progress of European integration, to name a few--have been disappointed,” Camdessus, managing director of the IMF, told the meeting.
He described growth as “anemic at best” and called for interest rate cuts to bring Europe out of its recent recession. And he singled out Germany for action down the road.
He said the problems of the world economy are feeding on one another and multiplying the damaging effects.
“Recession not only increases human deprivation, but also intensifies protectionist pressures and injects a virus that can be deadly into even the best-established instruments of economic cooperation,” he said.
The number of unemployed people in the industrial world is expected to reach 32 million this year--3 million more than during the depth of the recession a decade ago,” Camdessus said. “This is intolerable!”
U.S. Treasury Secretary Lloyd Bentsen agreed. Bentsen told the opening session of the three-day meeting that unemployment is unacceptably high and that world economic growth must be revived.
“The name of the game is jobs--it’s our primary responsibility,” Bentsen said. “We are moving in the right direction, but there’s certainly more that we can do.”
Camdessus painted the grim picture just three days after representatives of the seven richest industrial nations met for the fourth time this year, seeking ways to stimulate world economic growth.
In their comments over the last three days, European and Japanese finance officials have made it clear that they feel the worst is over and recovery is just around the corner.
Camdessus disagreed. He said that with inflation under control in the industrial world, there is room for more action in the form of cutting interest rates.
As the recovery gathers steam, industrial countries must act to reduce deepening government budget deficits to free up money for private business expansion, he said. Without concerted action, the world will fail to make progress and the poorest of the poor will be caught in an unending cycle of poverty, Camdessus said.
“The main problem in the developing world, of course, is that economic progress has been so uneven, bypassing hundreds of millions of the world’s poorest people,” he said.
The former Soviet-bloc nations struggling to convert to market economies face a fourth year of decline--with a 13% fall in output in the former Soviet Union alone, he said.
Nonetheless, he said, the IMF is unwilling to loosen the conditions of economic reform that must be met before it sends more money to the region.
The Group of Seven--Britain, Canada, France, Germany, Italy, Japan and the United States--pledged over the weekend to support Russian President Boris N. Yeltsin, although it has not followed up the pledge with any cash.