The present global macroeconomic outlook is characterized by low returns and downside risks. Inequality, a backlash against globalization and protectionism are on the rise. Widespread economic and political uncertainty negatively impact consumer sentiment and investment decisions. A more effective policy mix is needed to foster economic growth and reduce inequality. This implies improving the balance between different policy tools at the national level and stronger coordination of national strategies at the international level. On international trade, strong actions are needed to curb the spread of protectionist measures and to restore faith in global trade liberalization by better redistributing its benefits and protecting the weaker members of society. Finally, in order to foster a smooth functioning of the international financial system, financial regulation needs to be stabilized, avoiding regulatory uncertainty, which hampers the supply of credit to the real economy. A broader and more effective international strategy of capital flow management is also needed to orient global financial markets towards monetary and financial stability.
Paper presented at the international conference on “Major Challenges for Global Macroeconomic Stability. The Role of the G7”, organized in Rome on 27-28 March 2017 by the Istituto Affari Internazionali (IAI) with the support of the Italian Ministry of Foreign Affairs and International Cooperation and the Bank of Italy.
1. Macroeconomic policy coordination
2. International trade
3. Global financial stability