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BCN-06
IMF-ECONOMY-GROWTH
IMF’s Lagarde: Don’t see ‘elements of recession’ in near term
WASHINGTON, Dec 7, 2018 (BSS/AFP) – Despite some uncertainty and market
volatility, the United States is not likely to see an economic contraction in
the near term, IMF chief Christine Lagarde said Thursday.
On a day when Wall Street has dropped more than two percent, Lagarde said
“there’s a question mark about growth prospects going forward” but the
concerns are “a little bit overdone.”
“I don’t see the elements of recession in short order,” she said on CNBC,
and the IMF is forecast 3.7 percent US growth next year which “is not bad.”
However, she said the Federal Reserve was “probably going to slow down” its
rate increases as they look at economic data.
The US central bank has raised its benchmark lending rate three times this
year and is widely expected to do so again on December 19 but has signaled
that it may slow or even pause next year as the economy loses some steam.
Lagarde declined to make a recommendation to Fed policymakers but said
their moves will depend on “their reading of the state of the economy,” and
should be “well communicated” since US monetary policy has an impact on
economies around the world.
Asked about the impact of the tariff battle between the United States and
China, Lagarde said if it stopped now the direct hit to their economies would
be “minimal.”
But she warned that “if you add the indirect damage if you’re factoring
confidence, market apprehension and uncertainties…then you’re talking about
much more than that.”
The Washington-based crisis lender has calculated that an escalation of the
trade war could cut eight-tenths of a point off global growth by 2020, she
said.
But she said the weekend truce between the US and China gave reasons for
optimism and the 90-day time frame was enough to establish a framework for
further negotiations.
However, with complex issues like intellectual property rights, “it’s going
to take a long time.”
BSS/AFP/SR/1900 HRS