Washington, April 15

Facing a shaky world economy and political attacks on free trade, global finance leaders meeting in Washington are searching for ways to increase cooperation to battle a variety of economic threats.

The International Monetary Fund (IMF) is urging countries to launch a new round of public works projects to improve roads and other types of infrastructure in hopes the higher government spending will boost growth. But in an era of high budget deficits, that call has not met with much support.

The discussions are being held as part of the spring meetings of the 189-nation IMF and its sister lending organisation, the World Bank. Leaders of both institutions are sounding the alarm about the need for greater efforts to boost growth to make sure the world economy does not topple back into recession.

The Group of 20, representing the world’s biggest economies, is wrapping up two-days of talks today with Treasury Secretary Jacob Lew and Federal Reserve Chair Janet Yellen representing the United States. Those talks will be followed by meetings on Saturday of the policy-setting panels of the IMF and World Bank.

Lew met on Thursday with his counterparts from China and Japan.

In a statement, the US side said that both Lew and Chinese Finance Minister Lou Jiwei had discussed the importance of China moving toward a market-determined exchange rate in an ‘orderly and transparent way, while clearly communicating its policies and actions to the market’.

China’s government roiled markets in August and again in January with actions that raised worries that the world’s second largest economy was slowing more sharply than had been forecast, a development that raised concerns about the economic fallout on other nations.

In opening news conferences on Thursday, IMF Managing Director Christine Lagarde and World Bank President Jim Yong Kim stressed the need for stronger policies to combat the growing risks.

The two officials sought to address the political backlash against globalisation, which has helped propel the presidential campaign of Republican front-runner Donald Trump in the United States and has triggered an upcoming vote in Britain over whether that country should exit from European Union.

Both Lagarde and Kim said the answer to stagnant wages in many industrial nations and complaints about jobs being lost to trade competition was to pursue growth-oriented policies such as a boost in government infrastructure spending.

Kim rejected the idea that countries can boost stagnant wages by raising trade barriers. He said that lowering trade barriers had helped lift millions of people around the world out of poverty.

“This movement toward isolationism and the movement away from trade is very bad for poor people,” Kim told reporters. “It is very bad for our efforts to reduce poverty.”

Lagarde said that the recovery from the 2008 financial crisis and the deep recession that followed was still ‘too slow and too fragile’. She noted that the IMF has once again had to reduce its estimate for global growth, cutting the projection to 3.2 per cent for this year, down from a 3.4 per cent forecast made just three months ago.

Lagarde said growth at this rate was not enough to lift living standards or create sufficient job opportunities for the nearly 200 million around the world who are officially unemployed and looking for jobs.

And she said anaemic growth puts added strains on middle-class families and the poor and ‘emboldens the voices of protectionism and fragmentation’.