(Bloomberg) — There was plenty for global policy makers to discuss at the most recent International Monetary Fund-World Bank Meetings in Lima, Peru.
From lackluster corporate investment to a Federal Reserve inching towards its first interest rate hike in nearly a decade, central bankers and international finance chiefs could take their pick of topics to digest. Citigroup Chief Economist Willem Buiter was one of the attendees, and he has published a note outlining the four main topics of discussion amongst policy makers and his clients. Here they are:
1. The Chinese economy.
The consensus among people Buiter spoke with was stabilization in China in the near term with little risk of a drastic turn for the worse before the end of the year. However, things got a little less optimistic when looking farther out.
The perception that policy has been somewhat ineffective and hard to comprehend in some recent episodes has meant that some of our counterparts saw increasing risks that China would at some point in coming years suffer a sharper slowdown as it confronts its many policy challenges.
2. Risk of an emerging market crisis.
Slowing growth in emerging markets has been a big theme lately, and it was no different at the meetings in Lima. The vast majority of people Buiter talked to believed that these countries are looking at a growth crisis and not a financial crisis.
Most agreed that structural reforms are needed in a large number of EM countries to allow them to return [to] anything like the growth rates of previous years. But with the exception of a few countries (most notably India), there was little expectation that meaningful growth-enhancing structural reforms were on the cards in EMs.
3. Impacts of an EM crisis on developed markets.
Because growth in emerging markets has been a driver of world GDP in the years following the financial crisis, many have expressed concern about what the widespread impact of slowing growth in EMs would be. There seemed to be a good sense of optimism at the meetings.
There was an uneasy, but fairly general, sense that developed markets would only be moderately affected by the EM slowdown and that, with the partial exception of the major DM- commodity producers (Australia, Canada, New Zealand, Norway), they would be ‘OK’.