Global economic growth will be disappointing next year and the outlook for the medium-term has also deteriorated, the head of the International Monet-ary Fund (IMF) said in a guest article for German
Global economic growth will be disappointing next year and the outlook for the medium-term has also deteriorated, the head of the International Monet-ary Fund (IMF) said in a guest article for German newspaper Handelsblatt published on Wednesday.
IMF managing director Christine Lagarde said that the prospect of rising interest rates in the United States and an economic slowdown in China were contributing to 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 is posing problems for economies based on these, while the financial sector in many countries still has weaknesses and financial risks are rising in emerging markets, she said.
“All of that means global growth will be disappointing and uneven in 2016,” Ms 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 per cent in 2016. She said the start of a normalisation of US monetary policy and China’s shift toward consumption-led growth were “necessary and healthy” changes but needed to be carried out as efficiently and smoothly as possible.
There are “potential spillover effects”, with the prospect of increasing interest rates.
While expressing concern about the effect of US rate hike on emerging economies, she war-ned 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.
