The International Monetary Fund (IMF) lowered their global
economic growth forecast from 3.7% to 3.5%. Managing Director Christine Lagarde
explained that there might be an economic storm coming due to the economy
growing slower than they expected. She cited “four clouds”; trade tensions/tariff
escalations, Federal Reserve financial tightening, and the uncertainty of the
Brexit outcome along with the slowdown already adversely affected the Chinese
economy. Due to the tariff war between China and US we are already also seeing
an impact on the growth of the global economy. US-China “spat” is not only
having an impact on trade but eroding confidence and being reflected in
volatility in the markets. Additionally, increasing borrowing costs by
governments, firms and households are adding to the concern.
Lagarde summed up, "When there are too many clouds, it
takes one lightning (bolt) to start the storm,".
2 comments:
It is not surprising that there would be a downward shift in the forecasted economic growth, especially with all of the “clouds” that the article mentioned. It was interceding that the Lagarde, the IMF Managing Director, said that they “have no idea how it is going to pan out” in relation to the trade tensions between China and the U.S. This shows how unpredictable the times we are living in and should incentivize us to become more aware of the changes taking place globally. Thanks for sharing this article Bri!
I am not surprised either that the IMF downgraded their forecasted growth. The global economy has taken several different turns the past few years, with brexit looming and growth slowing in China. Some may also see this downturn as the next part of the business cycle. The question is will this downturn happen because people are anticipating it or will there be other larger factors.
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