The IMF says we're all in this together

The classic test for a conference is “what I do know at the end that I didn’t know at the beginning”.

No, we're not dwelling on the Conservatives talking tough in Manchester - easy to do in opposition - but rather, after a cumulative eight days of parlaying at the IMF and G20 meetings in Pittsburgh and Istanbul, there are probably four things that policymakers, business, investors and ordinary folk can take away and factor in.

The first is that this economic recovery looks very uncertain. One of the most frequently used phrases from people all nationalities was that the world was not “out of the woods”. Israeli central bank governor Stanley Fischer spiced it up by saying recovery was not “in the bag”.

The economy has indeed perked up. But as Justin Lin, the World Bank’s chief economist – another woods-man – said, the rebound was driven by governments’ stimulus packages and factories restocking after running down those inventories.

“They will disappear but the large excess capacity will still be there,” he said. “The global recovery is fragile because of the excess capacity in the real sectors.”

This links to the second finding: economies should not exit their stimulus packages until the recovery is so well-entrenched that unemployment starts to fall.

However that does not mean all countries will move at the same moment. Instead they will follow the same principles for an orderly exit and communicate their intentions to other nations.

This is an important distinction as it is clearly impractical for all countries to move simultaneously yet it is vital governments do not try to steal a competitive advantage by moving first, which might trigger a fresh round of protectionism.

Thirdly, emerging economies such as China and India are stepping up to claim their rightful place at the high table of global governance. The G20 is taking over as the premier forum of economic policy from the G7. This was evident from the G7 communique which said weakly that it would “adhere to the commitments agreed by the G20 in Washington, London and Pittsburgh”.

However the transition will not be immediate. The G7 insisted on talking about the Chinese exchange rate even though China was not in the room. The G20 was silent on currencies.

This disconnect needs to be solved as the decline in the dollar must be managed especially amid speculation that the greenback will lose its role as global reserve currency.

Fourthly the IMF seems prepared to take on the role of global policeman that the G20 envisages. On one hand it will oversee the economic reforms that G20 members will undertake to deliver sustainable growth.

On the other, it will produce regular assessments of the potential stresses in the global financial system that could lead to a financial crisis. These early warnings will not be made public but will be seen by finance ministers and central bank governors every six months.

Istanbul was turned into a war zone on Tuesday as a march by anti-IMF protestors turned into a violent confrontation between rock-throwing rioters and police armed with teargas, water cannon and batons.

It was a reminder that creating a sustainable and equitable world economy will be a journey beset with obstacles and delays. But as George Osbourne intoned frequently back in Manchester, we’re all in this together.