Dr. John Lipsky Delivers Exim Bank’s Commencement Day Annual Lecture 2015

Highlights from Dr. Lipsky’s Lecture:

• Although the onset of the Crisis remains vivid to me – as I had the benefit and burden of witnessing it from my position at the IMF – I recall how the scale of the economic and financial challenge represented by the unfolding Crisis – that began for me in August 2007 -- was not recognized generally until the dramatic events of September 2008.

• One aspect that was clear to all in the wake of the Lehman bankruptcy was that the sharp increase in the relative economic weight of the key emerging market economies meant that success in resisting the Crisis would require these counties’ full partnership.

• The near-term outlook contains important uncertainties. These include the financial market and economic impact of inevitable Fed rate hikes and the continuing strains within the Eurozone from – among other things – the yet-unresolved Greek situation, and the fate of promised French and Italian reform efforts. Moreover, the outlook for Japan – and the additional reforms measures that may be enacted by the Abe government – remains far from clear.

• The most likely outcome for the advanced economies in 2015 is for a moderate improvement in growth prospects, but still subdued inflation pressures in the context of residual unused capacity.

• There is a sense around the world that India could be at the commencement of an exciting period of accelerated progress that could encompass many important social, economic and financial aspects. However, some of this current relative favour is just that, reflecting a somewhat less positive outlook than previously toward other large emerging economies and markets, and in fact toward emerging market economies in general.

Dr. John Lipsky, Senior Fellow, Paul H. Nitze School of Advanced International Studies, Johns Hopkins University, Washington D.C and Former First Deputy Managing Director of the International Monetary Fund, delivered Exim Bank’s Commencement Day Annual Lecture in Mumbai on March 23, 2015. He spoke on the topic “Evolving International Governance, Emerging Markets and India’s Economic Prospects.”

In his Lecture, Dr. Lipsky discussed four themes: He began by summarizing some recent history and provided perspective on the changing role of emerging market economies. Next, he spoke on the prospects and risks facing the global economy, including a highly compressed progress report on recent efforts to improve global economic and financial governance in the wake of the Global Financial Crisis of 2007/2009. Third, he explored recent shifts in international investors’ and businesses’ views of the prospects of emerging economies, and finally, he drew some implications of relevance for India stemming from these developments.

He spoke at length about the changing dynamics in the geopolitical and global economic scenario and elaborated on the evolving investor views of Emerging Market economies. Dr. Lipsky said, “India’s circumstances today are not exactly ideal, but they are unusually positive. The favourable combination of low advanced economy inflation and low interest rates – and improving advanced economy growth prospects -- will not last forever, but it should not disappear quickly. Lower energy prices and commodity prices are expected to add to the positive mix for some time to come. Investor expectations are favourable, both because of promises of reform and because of problems evident in other emerging markets.”

Dr. Lipsky currently is a Senior Fellow at Johns Hopkins University's Paul H. Nitze School of Advanced International Studies, based in Washington, DC. Previously, Dr. Lipsky served as First Deputy Managing Director of the International Monetary Fund from September, 2006 to August, 2011, as well as Acting Managing Director during May-July 2011. Subsequently, he served as Special Advisor to the IMF's Managing Director through the Cannes G20 Summit in November, 2011. Before joining IMF in 2006, Dr. Lipsky was Vice Chairman of the JPMorgan Investment Bank. Previously, Dr. Lipsky served as JPMorgan's Chief Economist, and as Chase Manhattan Bank's Chief Economist and Director of Research.

Mr. Yaduvendra Mathur, Chairman and Managing Director, Exim Bank of India, said that Exim Bank’s Commencement Day Annual Lecture series, instituted in 1986, has earned recognition as an important milestone in contributing to the debate and discussions on contemporary trade and development issues impacting global economy. Dr. Hasmukh Adhia, Secretary, Department of Financial Services, Ministry of Finance, Government of India, presided over the Lecture. Dr. Adhia said, “India is among the few emerging market economies that were able to withstand the global financial crisis and still emerge as one of the growth drivers of today”.  He emphasized upon the ‘Make in India’ initiative of the Government of India which is aimed at transforming the nation into a manufacturing hub and development of the country’s infrastructure, while creating an environment conducive for setting up of business ventures in India.  He also stressed that while the manufacturing sector in India has grown rapidly over the years, there is need for enhanced role of the sector towards contributing to national development.