IMF Director: The Global Economy Has Slowed

The managing director of the International Monetary Fund (IMF) said economic growth around the world has slowed down, which has left things in a precarious position, according to a report from Bloomberg.

In remarks prepared for a speech in Washington, Christine Lagarde said the world’s economy hasn’t been as strong since the fund’s last forecast update in late January of last year. However, a recession isn’t likely, she said on Tuesday (April 2).

“The global economy is at a ‘delicate moment,’” Lagarde said, and called the slowdown a “synchronized deceleration.”

The fund’s prediction for world economic growth was lowered in January, to 3.5 percent this year and 3.6 percent the next. The cut was the second in three months, and the new forecast will be released on April 9.

Lagarde predicts that world economic growth will speed up “some” in the second half of the year and into 2020, but concedes there are quite a few risks on the horizon that could interfere. For example, Brexit, oversized debt in certain countries, trade tensions and “a sense of unease in financial markets” could all affect the economy.

She called out policymakers and warned them to avoid mistakes when handling monetary policy, saying they should stay accommodative if inflation is low, but still have some give in the exchange rate when needed.

Lagarde also warned countries with high public debt and low interest rates will have “limited room to act when the next downturn comes, which inevitably it will,” she said. “For many countries, this implies making smarter use of fiscal policy.”

Also, corporations’ market power continues to rise, and the highest price markups are happening through a “small number of highly dynamic companies.”

“I am not saying that we currently have a ‘monopoly problem.’ But I am saying that we should take appropriate measures so that it does not become a problem,” she added.