In a key note address to the International Economic Forum of the Americas in Montreal yesterday, the IMF Managing Director Christine Lagarde called for co-operation among key global players.
"Why is cooperation important? As any hockey team can attest, team work is key. If countries implement the right set of policies for their domestic welfare, the whole world will get to benefit," she said.
"Indeed, in the context of the G20 meeting in Sydney, our estimates suggest that cooperative action can increase global output by 2% over the next five years. Reaping these benefits lies in working together in laying the foundations for the next era of growth," Lagarde said.
Across the world, she said, many countries are trying to rebalance their economies toward more stable sources of growth-be it China, trying to rebalance away from investment toward consumption, or Germany trying to boost domestic sources of demand.
Lagarde said the global economy is turning the corner on the Great Recession, and overall prospects are improving.
"Economic activity is gaining momentum, and despite a bumpy start earlier in the year, we expect an expansion of 3.6% in 2014 and 3.9% in 2015," she said.
Advanced economies are finally strengthening, with growth expected to be about 2.3% this year, even though their recovery remains uneven. Emerging market and developing economies will continue to provide the bulk of global growth, albeit at a slower pace than before. We still expect them to grow at a healthy clip of five% this year and 5.4% next year, she added.
"This is good news. Even so, we can see three major concerns clouding the horizon. First, in the advanced economies, there is the emerging risk of 'low-flation,' particularly in the Euro Area," she said.