Featured # Markets | 4 years ago

International Monetary Fund Announces That it Will Likely Decrease Growth Outlook

International Monetary Fund Managing Director Christine Lagarde stated that the institution is probably going to lower its 2016 global growth prediction again as economic prospects are looking poor due to lackluster demand, affecting trade, investment and growing inequality. Lagarde told said in an interview that G20 leaders are going to be required to work harder to increase demand. At the same time, while huge threats to the global economy have not yet materialized, such as recession that came from Britain’s decision to secede from the European Union or a decrease in Chinese growth, she stated that the overall outlook was “slightly declining growth, fragile, weak and certainly not fueled by trade.”

“You could argue that Brexit is not really delivering the massive crisis that we had expected, you could argue that the Chinese transition is proceeding reasonably well, and you could argue that low commodity prices have gone up a little bit,” Lagarde added. “So this is on the surface. However, when you look deep down at the economic growth prospects, at the growth potential, at the productivity, we are not getting very good signals, and we will probably be revising down our forecast for growth in 2016.”

The IMF is set to revise its World Economic Outlook predictions in early October before its annual meetings. Another cut would be the sixth consecutive growth markdown in a year and a half. Mentioning global uncertainty over the June 23 Brexit vote, the IMF in July decreased global Gross Domestic Product growth estimates to 3.1 percent for 2016 as well as 3.4 percent for 2017; down around a tenth of a point for both years. The full economic effect of the Brexit crisis could not accurately be calculated until next year, when more will learn the future of the United Kingdom – European Union relationship, according to Lagarde.


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