Boosting the global economy

Europe is also at a key juncture. The eurozone is finally showing signs of recovery, but growth is uneven and unbalanced. While many countries are doing well, demand in general remains weak, and unemployment in the periphery remains obstinately high, particularly for young people.

One area of uncertainty for Europe is the health of its banks. The forthcoming stress tests and asset-quality review can help restore confidence and advance financial integration, but only if they are conducted well. Europe also needs to boost demand, strengthen its financial and fiscal architecture, and put in place structural reforms to ensure sustained growth and job creation.

Over the past half a decade, the emerging markets have been in the vanguard of economic recovery: together with developing countries, they have accounted for three-quarters of global GDP growth. But these economies' momentum slowed in 2013, as uncertainty over the timing of the normalization of the US monetary policy coincided with doubts about the sustainability of their growth path.

While the worst fears have faded, the emerging economies face new policy challenges. In responding to slower demand, policymakers must be wary of financial excess, especially in the form of asset bubbles or rising debt. They should also focus on strengthening financial regulation, in order to manage credit cycles and capital flows more effectively, and on recreating fiscal room for maneuver.

Low-income countries, too, have been a bright spot for the global economy over the last five years. They proved resilient in the face of crisis, and many monetary policies - especially in Africa, where annual output rose by about 5 percent in 2013 - are enjoying strong growth. Now is the time to build on these gains, primarily by strengthening these countries' capacity to raise revenues. With demand from emerging markets weakening, low-income countries should bolster their defenses against a serious downturn, even as they continue to focus their spending on key social programs and infrastructure projects.

Middle East countries in transition face additional challenges in the form of social instability and political uncertainty. These problems should be addressed by laying the groundwork for dynamic and transparent economies, promoting more inclusive growth and ensuring continued support from the international community.

While challenges vary by country and region, many common problems must be addressed in the years ahead. Too many countries face a legacy of high public and private debt, fiscal and current account imbalances, and growth models that are unable to generate enough jobs. The international community also needs to complete the regulatory reforms required to create a safer financial system that better supports the needs of the real economy.

These are not abstract challenges. Only by addressing them can we ensure future prosperity at a time when billions of people have rising aspirations - to find jobs, to rise out of poverty and to one day join the global middle class.

In 2014, we need to take steps to help make this dream a reality. The IMF is committed to working with its 188 member economies to define and implement the policy measures that can power the engines of growth - and lift all people to renewed prosperity.

The author is managing director of the International Monetary Fund.

Project Syndicate