The head of the International Monetary Fund (IMF) said today that 70 per cent of countries can expect a slowdown in growth in 2019 in the latest gloomy prediction about the global economy.
Speaking in New York, Christine Lagarde suggested that the IMF would downgrade global growth forecasts. She said that since January the global economy has “lost further momentum, as you will see from our updated forecast next week”.
However, in her speech to the US Chamber of Commerce Lagarde said that although the economy “is at a delicate moment” she did not expect a recession in the near term and thought a pick up in growth in 2020 was likely.
Yet she said that “the expected rebound in global growth later this year is precarious” and vulnerable to uncertainties such as Brexit, global trade tensions, and high levels of debt in some sectors and countries.
Lagarde’s warning comes amid growing concerns over a slowing economy which has seen central bankers around the world hold interest rates at low levels to try to stimulate economies.
Obliquely criticising the US’s trade policy, Lagarde said that tariff increases on goods traded between the US and China could reduce both countries’ GDP. “Nobody wins a trade war,” she said.
Lagarde said that it was clear “that not everyone has benefited” from global trade, but said “trade barriers are not the answer”.
The IMF boss also called for a fairer global tax regime, saying that poorer countries are losing out on growth. “Non-OECD countries lose about $200 billion a year because companies are able to shift profits to low-tax locations,” she said.