(CN) - The recent positive turn in the global economy shouldn't lull anyone into complacency, financial leaders said Friday, the closing day of the World Economic Forum in Davos, Switzerland.
Instead the world's leaders in government, business and banking should look at this period of economic growth as a time to “fix the roof while the sun shines” and to shift the recovery from a cyclical to a structural one.
Christine Lagarde, managing director of the International Monetary Fund, said the global economy is currently in a sweet spot due to a cyclical upswing and mostly good monetary and fiscal policies.
“All major developed and developing economies are doing well and let’s celebrate that,” Lagarde said.
But she cautioned that prosperity is not shared by all, and one-fifth of emerging and developing countries are actually set to see a decline in their per capita gross domestic product, defined as the total value of goods produced and services provided in a country during one year.
Lagarde said chief among her concerns is the continuing potential for financial vulnerability. While US tax cuts will have positive results in the short term, this may lead to inflated asset prices and easy financing, which comes with risks, she said.
She said her second concern is excessive and growing inequality in global economies, and the third what she sees as the lack of international cooperation and the geopolitical risks this presents.
As for the short-term outlook, in Europe and Asia, Mark Carney, governor of the Bank of England, said his country is on the path to normalization.
He warned of complex decisions on monetary policy ahead as the Brexit process unfolds, but gave the assurance that the financial sector has been strengthened in the wake of the 2008 crisis and has plenty of safeguards and “shock absorbing capacity.”
Haruhiko Kuroda, governor of the Bank of Japan, said his nation has notched up seven straight quarters of economic growth of close to 2 percent – the longest positive run in Japan’s post-war history.
However, the central bank faces a continuing challenge of trying to move inflation towards the nation's 2 percent target -- a move Kuroda said would boost the economy.
Consumer prices and wages in Japan are inching up, but a key challenge is the tenacious deflationary mindset among consumers after 15 years of deflation, he said.
Demography is also a challenge for Japan, with labor shortages in almost every sector of the economy, Kuroda noted.
Carrie Lam, chief executive of Hong Kong SAR, said Hong Kong is positioning itself to take advantage of opportunities in Asia and particularly China.
“We should also take this opportunity to improve governance, to focus more on trade rules, more regulatory collaboration and to put in policies to deal with poverty and income disparity,” he said.
Lam said while the numbers are still out, Hong Kong expects they'll show full-year growth of 3.7 percent or 2017 compared to 2 percent in 2016.
Throughout the annual meeting in Davos senior U.S. officials traveling with President Donald Trump have hit back at assertions that the administration's "America First" agenda was hurting globalization and trade.
Trump himself said Friday during the closing keynote address at the forum the America open for business under his leadership.
The Commerce Department said Friday the United States' gross domestic product grew at a solid 2.6 percent rate in the final three months of last year.
The advance in U.S. GDP in the fourth quarter followed gains of 3.1 percent in the second quarter and 3.2 percent in the third quarter.
The slowdown during the last quarter of the year reflected a worsening trade deficit and less growth in inventory restocking by companies, the department said..
For all of 2017, the economy grew 2.3 percent, little changed from the modest 2.2 percent average growth rate turned in since the post-2008 recession ended.
Trump also used the Davos spotlight to try to assure the wary gathering that he's willing to negotiate trade deals with other global economies so long as they are fair and reciprocal.
Unfair trade "undermines us all," he said.
He went on to say the U.S. is prepared to negotiate mutually beneficial bilateral trade agreements with all countries, including those in the new Trans-Pacific Partnership announced earlier this week.
Trump directed his trade representative to withdraw from the sweeping pact that involved the U.S. and 11 other Pacific Rim nations last year.
Now he says he is willing to negotiate with the partnership's members "if it is in the interests of all" sides.