IMF chief warns global economic growth will be at its worst since 2009

Christine Lagarde, the head of the International Monetary Fund (IMF), has warned that the global economic growth will slump to its lowest level since the deep recession of 2009 owing to slowdown in big emerging market countries. She added that India still remains “a bright spot.”

Speaking in Washington ahead of the Fund’s annual meeting next week, the IMF chief said, "India remains a bright spot. China is slowing down as it rebalances away from export-led growth. Countries such as Russia and Brazil are facing serious economic difficulties. Growth in Latin American countries, in general, continues to slow sharply."

Lagarde said the prospect of rising interest rates in the US and China's slowdown are contributing to uncertainty and higher market volatility. "There has been a sharp deceleration in the growth of global trade. And the rapid drop in commodity prices is posing problems for resource-based economies," she said.

Highlighting that financial risks are now elevated in emerging markets, Lagarde said that weaknesses still exist in financial sectors of many countries despite progress in recent years to make the system much safer than what it was earlier.

Referring to the release of World Economic Outlook numbers next week, she said global growth will likely be weaker this year with only a modest acceleration expected in 2016.

Christine Lagarde, however, stated that the good news is that there has been a modest pickup in advanced economies. “The moderate recovery is strengthening in the Euro Area; Japan is returning to positive growth; and activity remains robust in the US and the UK as well," she said.
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