On Sunday the International Monetary Fund (IMF), warned governments about the possibility of an upcoming economic storm due to reduced growth in comparison to expected growth.
During the world Government summit in Dubai, the managing director of IMF, Chrisitne Lagarde said “the ultimate conclusion is that we see economic growth slower than what was expected or calculated by analysts. Just in the previous month, IMF reduced its prediction of the growth of global economic forecast for this year from 3.7% to 3.5%.
Chrisitne Lagarde, quoted what she termed “four clouds” as some of the chief issues effecting the global economy and warned about an upcoming economic storm. The risk would include trade tensions, financial tightening, and tariff escalations, uncertainty due to Brexit outcome and the spillover effect along with a fast paced slowdown of the Chinese economy.
Another main assessment made by Lagarde, for the reason in the form of trade tensions due to tariff difference between the nations of United States and China. These big economy nations are currently facing the impacts of the slowdown.
“We have no idea how it is going to pan out and what we know is that it is already beginning to have an effect on trade, on confidence and on markets” Lagarde mentioned this as a warning to the governments. This statement was issued as a warning to governments to avoid protectionism. She also mentioned about the high risk involved due to growing borrowing costs, with reference to borrowing costs of “heavy debt” being racked by the various government, households and firms. She also mentioned “When there are too many clouds, it takes one lighting (bolt) to start the storm.