IMF Cuts 2019 Global Growth Forecasts Again: "We Have No Idea," Says Lagarde

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Published : February 11th, 2019
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Category : Opinions and Analysis

For the fourth time since October, the IMF revised its global growth forecast lower.

The global economy is starting the year on weaker footing, according to new quarterly forecasts from the International Monetary Fund.

The global economy is starting the year on weaker footing, according to new quarterly forecasts from the International Monetary Fund.

That report was on January 21. For details, see the IMF's World Economic Outlook Update, January 2019.

Today, Lightening Bolts and Clouds

Last month, the IMF lowered its global economic growth forecast for this year from 3.7 percent to 3.5 percent.

Lagarde cited what she called "four clouds" as the main factors undermining the global economy and warned that a "storm" might strike.

The risks include "trade tensions and tariff escalations, financial tightening, uncertainty related to (the) Brexit outcome and spillover impact and an accelerated slowdown of the Chinese economy", she said.

Lagarde said trade tensions -- mainly in the shape of a tariff spat between the United States and China, the world's two biggest economies -- are already having a global impact.

"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," she said, warning governments to avoid protectionism.

Lagarde also pointed to the risks posed by rising borrowing costs within a context of "heavy debt" racked up by governments, firms and households.

"When there are too many clouds, it takes one lightning (bolt) to start the storm," she said.

"We Have No Idea"

The IMF is perpetually far behind the curve. It never sees the clouds or the lightening bolts in real time.

It's refreshing to hear Lagarde say "we have no idea". The IMF should say that every month.

Source : moneymaven.io
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Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. He writes a global economics blog which has commentary 5-7 times a week. He also writes for the Daily Reckoning, Whiskey & Gunpowder, and has over 80 magazine and book cover credits. Visit http://www.sitkapacific.com
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