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IMF “Delicate Moment” for Global Economy

Release Date: 02 Apr 2019
IMF “Delicate Moment” for Global Economy
The global economy is experiencing a “delicate moment” with growing risks to growth and an unsettled climate, IMF Managing Director Christine Lagarde said Tuesday in Washington.
Citing trade tensions, tighter financial conditions and geopolitical uncertainty surrounding Brexit and other events, Global growth has lost momentum she said in a speech at the US Chamber of Commerce laying out the key themes of next week’s Spring Meetings of the IMF and World Bank.
“Only two years ago 75 percent of the global economy experienced an upswing. So, it was a synchronized growth acceleration for this year we expect not 75 but 70 percent of the global economy to experience a slowdown in growth, exactly the opposite of what we had,” Lagarde said.
“But just to be clear we do not see a recession in the near term. In fact, we expect some pickup in growth in the second half of 2019 and into 2020. So you see you know what I mean by unsettled. And indeed the global economy is at a delicate moment.”
The IMF will release its latest forecast for global economic growth next Tuesday in Washington. Lagarde gave a teaser for the World Economic Outlook including major risks:
“The expected rebound in global growth later this year and into early 2020 is precarious. Why is that? Because it is vulnerable to downside risks including country related uncertainties such as Brexit for instance and broader uncertainties such as high debt in some sectors. In some countries tensions around trade policy still uncertain. And a sense of an ease in financial markets for example should there be a sharp unexpected tightening of financial conditions. It could create serious challenges for many governments and companies around the world in terms of refinancing and debt service particularly those that have borrowed in non-domestic currencies which could amplify exchange rate movements and financial market corrections so indeed it is a delicate moment in and of itself and it requires a delicate mix of policies.”
Lagarde urged policymakers to prepare for slowing growth by making smart decisions on trade and fiscal policy.
“Now I don't want to be overly dramatic because we don't see a recession. We do not see it. But we believe that because it is so delicate because it is filled with in a way self-inflicted wounds that only men and women can address. That's why it requires this, you know, ‘handle with care’ approach that brings together all domestic policies cross-border and international coordination.”
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