IMF Managing Director Lagarde Gives Pessimistic Forecast on Global Economy Growth

30 Dec 2015

According to Lagarde, the growth of global economy in 2016 will be disappointing and discontinuous, RBC-Ukraine reports.

The prospects for raising interest rates in the USA and Chinese economy slowdown will become main factors of uncertainty and higher risks for global economy, as it is said in the Handelsblatt article of the Managing Director of the International Monetary Fund (IMF) Christine Lagarde, Reuters reports.

According to Lagarde, the growth rate of world trade has significantly slowed down, and the price drop for raw material poses a problem for economies, dependent on raw materials.

“This all means that in 2016 the global growth will be disappointing and discontinuous”, said the Managing Director of the IMF.

Specifically, the growth is retarded by low productivity, ageing population and consequences of global financial crisis.

Lagarde considers that the beginning of normalization of monetary policy of the USA and the reorientation of Chinese economy to domestic consumption were necessary and reasonable changes, which need to be made carefully and diligently.

According to the Managing Director of the IMF, the majority of developed economies, except for the USA and, possibly, UK, should continue to follow free monetary policy. She also warned that the growth of interest rate of FRS and the USD strengthening can lead to corporate defaults, what, in its turn, can “infect” banks and states.