At a news conference to open the IMF-World Bank Spring Meetings, IMF Managing Director Christine Lagarde on Thursday urged world leaders to work together to address risks to the world economy.
“Just like nature, the global economy is also currently quite uncertain. As I said a year ago, we were talking about synchronized growth. And 75 percent of the global economy was going through that phase. As you heard a couple of days ago, we are now talking about a synchronized slowdown by 70 percent of the global economy. So our forecast for growth this year is 3.3 percent, going back up ‑‑ we hope ‑‑ in 2020, based on our forecast, to 3.6 percent. But we contend that we are at a delicate moment. And this expected rebound from 3.3 in 2019 to 3.6 in 2020 is precarious and subject to downside risks,” Lagarde said in a news conference at the open of the meetings in Washington, DC.
Lagarde said the risks include trade tensions, high public and private debt as well as Brexit. But, she welcomed the 6 month delay for Brexit.
“It gives time for continued discussions between the various parties involved in the U.K. It probably gives time to the economic agents to better prepare for all options. And, you know, I am particularly thinking of the industrialists and the workers in the U.K. in order to try to secure their future, that that gives a bit more time. On the other hand, it is obvious that it is continued uncertainty. And it does not resolve, other than by postponing what would have been a terrible outcome because we believe that, in terms of economic consequences, the no‑deal Brexit would have been a terrible outcome,” she said.
Lagarde also supported the judicious use of accommodative polices, but warned policymakers against only relying on one tool from their economic toolbox.
“Monetary policies have been extremely efficient but has also not run its course but has, as we stand now in many countries very low interest rates and not much room to maneuver unless they were going to explore yet again more traveling into negative territory and their balance sheets are quite large. So, our recommendation to monetary authorities is, please stay accommodating for many of you. Facilitate the fiscal measures that need to be taken.”
You can watch the video of the full news conference at IMF.org