DUBAI, Feb 11, 2019 (BSS/AFP) – The International Monetary Fund on Sunday
warned governments to gear up for a possible economic storm as growth
undershoots expectations.
“The bottom-line — we see an economy that is growing more slowly than we
had anticipated,” IMF Managing Director Christine Lagarde told the World
Government Summit in Dubai.
Last month, the IMF lowered its global economic growth forecast for this
year from 3.7 percent to 3.5 percent.
Lagarde cited what she called “four clouds” as the main factors
undermining the global economy and warned that a “storm” might strike.
The risks include “trade tensions and tariff escalations, financial
tightening, uncertainty related to (the) Brexit outcome and spillover impact
and an accelerated slowdown of the Chinese economy”, she said.
Lagarde said trade tensions — mainly in the shape of a tariff spat
between the United States and China, the world’s two biggest economies — are
already having a global impact.
“We have no idea how it is going to pan out and what we know is that it is
already beginning to have an effect on trade, on confidence and on markets,”
she said, warning governments to avoid protectionism.
Lagarde also pointed to the risks posed by rising borrowing costs within a
context of “heavy debt” racked up by governments, firms and households.
“When there are too many clouds, it takes one lightning (bolt) to start
the storm,” she said.