2016 global growth and outlook disappointing - Lagarde

Global economic growth will be disappointing next year and the outlook for the medium-term has also deteriorated, the head of the International Monetary Fund said yesterday.

IMF managing director Christine Lagarde said the prospect of rising interest rates in the United States and an economic slowdown in China were contributing to uncertainty and a higher risk of economic vulnerability worldwide.

Added to that, growth in global trade has slowed considerably and a decline in raw material prices is posing problems for economies based on these, while the financial sector in many countries still has weaknesses and financial risks are rising in emerging markets, she said.

“All of that means global growth will be rather disappointing and uneven in 2016,” Lagarde said, noting that mid-term prospects had also weakened as low productivity,ageing populations and the effects of the global financial crisis dampened growth.

Lagarde said the start of a normalisation of US monetary policy and China’s shift towards consumption-led growth were “necessary and healthy” changes but needed to be carried out as efficiently and smoothly as possible.

The US Federal Reserve hiked interest rates for the...