IMF chief still sees growth amid grow­ing global risks

The Pak Banker - - FRONT PAGE -

SHANG­HAI: In­ter­na­tional Mon­e­tary Fund Man­ag­ing Di­rec­tor Chris­tine La­garde said she still sees growth in­tact, even amid grow­ing risks to the global econ­omy. As fi­nance chiefs from the world's 20 big­gest economies be­gin a two-day meet­ing in Shang­hai, La­garde cited threats from geopo­lit­i­cal risk, the credit cy­cle, cap­i­tal out­flows and fall­ing com­mod­ity prices. "We con­sider at the mo­ment that the like­li­hood of ma­te­ri­al­iza­tion of such risks is slightly higher, but we still see growth," she said. China is in a mas­sive tran­si­tion to­ward fo­cus­ing on ser­vices and con­sump­tion, and the IMF strongly rec­om­mended that the na­tion set a growth tar­get range of 6 per­cent to 6.5 per­cent, La­garde said. The govern­ment this month said it set a 6.5 per­cent to 7 per­cent range for its eco­nomic growth tar­get this year, slower than last year's goal of about 7 per­cent.

Mean­while, the ef­fects of cen­tral bank mon­e­tary poli­cies, even in­no­va­tive ones, are di­min­ish­ing, La­garde said Fri­day at an In­sti­tute of In­ter­na­tional Fi­nance con­fer­ence on the side­lines of the Group of 20 fi­nance min­is­ters and cen­tral bankers meet­ing. The IMF this week urged the world's big­gest economies to come up with new ways to sup­port de­mand and con­tain risks as the out­look for global growth de­te­ri­o­rates. The Wash­ing­ton, D.C.-based fund wants G-20 na­tions to un­leash fis­cal stim­u­lus and struc­tural re­forms. Of­fi­cials in­clud­ing U.S. Trea­sury Sec­re­tary Ja­cob J. Lew have talked down prospects for a ma­jor global ef­fort to stem fi­nan­cial-mar­ket tur­bu­lence.

La­garde said that emerg­ing mar­kets are a mixed bag of dif­fer­ent sit­u­a­tions, and added that the IMF has been ap­proached by sev­eral com­mod­ity-de­pen­dent coun­tries seek­ing as­sis­tance from the fund's fi­nan­cial in­stru­ments.

"We are still in an en­vi­ron­ment where there is growth around, and I can un­der­stand why quite a few play­ers are now say­ing there is an over­re­ac­tion of the mar­kets and there is prob­a­bly too much anx­i­ety that is cur­rently war­ranted by what's hap­pen­ing in the fun­da­men­tals," La­garde said.

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