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International Monetary Fund

IMF Managing Director Christine Lagarde on Global Economic Growth and Future Challenges

Strategic Insights

— 1 min read

IMF Managing Director Christine Lagarde discussed global economic growth and the future challenges facing policymakers during an interview with Bloomberg TV on April 16, 2015. Lagarde emphasized the need for policymakers to address the risks ahead, particularly in emerging markets, which represent 70% of the growth expected this year. She also highlighted the importance of structural reforms to boost growth potentials and prevent the exhaustion of monetary policies.

Key Takeaways:

  • Lagarde warned of a "new mediocre" if policymakers fail to address the risks ahead, but noted that a better outcome is possible if they take the right measures.
  • The global economy is expected to grow at 3.5% this year and 3.8% next year, but the recovery is uneven, with some advanced economies doing better than others.
  • Emerging markets, which have been slow-moving, still represent 70% of the growth expected this year.
  • Lagarde emphasized the importance of structural reforms to boost growth potentials and prevent the exhaustion of monetary policies.
  • The European Central Bank's (ECB) move towards normality will be a gradual process, with the ECB's ultra-accommodative policies likely to continue for some time.
  • Largargue noted that the Fed, Bank of Japan, and ECB are not likely to move their monetary policies at the same time, which should balance the risk of capital outflows from emerging markets and high-yield instruments.

Statistics:

  • Global economic growth is expected to be 3.5% this year and 3.8% next year.
  • Emerging markets represent 70% of the growth expected this year.
  • The European Central Bank's (ECB) interest rate is currently negative, and the 10-year bond yield is close to 0%.
  • The U.S. is expected to have a strong economy, with growth representing 3.8% next year.
  • The euro area is "picking up some growth," but the recovery is still uneven.

Sources:

  • IMF Press Release, April 16, 2015
  • Bloomberg TV Interview, April 16, 2015
  • European Central Bank, Monetary Policy, April 16, 2015
  • U.S. Bureau of Economic Analysis, National Income and Product Accounts, April 16, 2015

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