Connect with us

Hi, what are you looking for?

NewsTimes.co.ukNewsTimes.co.uk

MONEY

IMF chief Lagarde warns of disappointing global growth in 2016

Global economic growth will be disappointing next year and the outlook for the medium-term has also deteriorated, the head of the International Monetary Fund has warned.

The IMF managing director, Christine Lagarde, said the prospect of rising interest rates in the US and an economic slowdown in China were feeding uncertainty and a higher risk of economic vulnerability worldwide.

Added to that, growth in global trade has slowed considerably and a decline in raw material prices was posing problems for economies reliant on commodities, while many countries still had weak financial sectors as the financial risks increase in emerging markets, she said.

“All of that means global growth will be disappointing and uneven in 2016,” Lagarde said, noting that mid-term prospects had also weakened as low productivity, ageing populations and the effects of the global financial crisis dampened growth. In October, the IMF forecast that the world economy would grow by 3.6% in 2016.

Writing in German newspaper Handelsblatt, Lagarde said the start of a normalisation of US monetary policy and China’s shift towards consumption-led growth were “necessary and healthy” changes but needed to be carried out as efficiently and smoothly as possible.

The US Federal Reserve hiked interest rates for the first time in nearly a decade this month and made clear that was a tentative beginning to a “gradual” tightening cycle.

There are “potential spillover effects”, with the prospect of increasing interest rates there already having contributed to higher financing costs for some borrowers, including in emerging and developing markets, Lagarde said.

While countries other than highly developed economies were generally better prepared for higher interest rates than previously, she was concerned about their ability to absorb shocks, she said.

Emerging market companies with debt in dollars and revenue in sinking local currencies could struggle as the Fed begins what is expected to be a series of interest rate increases.

Advertisement. Scroll to continue reading.

Lagarde warned that rising US interest rates and a stronger dollar could lead to companies defaulting on their payments and that this could “infect” banks and states.

But she said the risks associated with these changes could be overcome by supporting demand, maintaining financial stability and reforming structures. “Most highly developed economies, except the USA and possibly Britain, will continue to need loose monetary policy, but all countries in this category should comprehensively factor spillover effects into their decision-making,” Lagarde said.

 

You May Also Like

UK NEWS

Professing to be the lead in Thai relationship with over 1.5 million enrolled single people, Cupid Media’s ThaiCupid brings the one in every of...

UK NEWS

Read more about switzerland women here. Swiss ladies and men are not reknown for being the most chatty, outgoing or spontaneous when meeting strangers...

WORLD NEWS

An exclusive article form Orestis Karipis In the 1930’s and 1940’s acid was the weapon of deceived husbands and wives in the Western world...

FOOD TIPS

In food, if there is one thing you can say without fear of contradiction, it is this: Britain loves burgers. The UK market is...

Copyright © 2020 NewsTimes.co.uk All Rights Reserved