IMF: World economy losing momentum but should be able to avoid recession in the near term

Anca Alexe 03/04/2019 | 08:22

International Monetary Fund (IMF) chief Christine Lagarde warned that about 70 percent of countries around the world should expect slower growth in 2019 as the global economy is losing momentum, The Guardian reports.

Lagarde mentioned the issues that had unsettled the world economy in recent months: trade tensions, Brexit concerns, and tougher financial conditions as central banks raised interest rates.

She said in a speech on Tuesday that the IMF was likely to downgrade its forecast for global growth in 2019 and 2020 next week. In their most recent forecast in January, it said the world economy would expand by 3.5 percent in both years.

“A year ago, I said: ‘The sun is shining – fix the roof.’ Six months ago, I pointed to clouds of risk on the horizon. Today, the weather is increasingly unsettled,” she said.

However, Lagarde also noted that the global economy should be able to avoid a full-blown recession in the near term, and pick up growth in the second half of 2019 and in 2020. But she warned that there would still be risks to this, related to Brexit, high debt in some sectors and countries, trade tensions and unease in financial markets.

“Many economies are not resilient enough. High public debt and low interest rates have left limited room to act when the next downturn comes, which inevitably it will,” she said.