U.S. economy perking up
‘More winners ... than losers’ from oil,
Economic growth will pick up this year in Europe, the United States and other advanced economies while slowing in China and some other developing countries, International Monetary Fund Managing Director Christine Lagarde said Thursday.
Declining prices of commodities, such as oil, copper and iron ore, will hurt growth in some developing economies, such as China and Brazil, Lagarde said.
Echoing themes she has spoken on at other events associated with this week’s World Bank-IMF spring meetings in Washington, Lagarde gave a wide-ranging talk at George Washington University on Thursday afternoon before an audience of college students and delegates to the meetings.
Although growth in China will slow, it will continue to make a “phenomenal” contribution to global growth, she said.
Overall the decline in oil prices will deliver “a net positive on an aggregate global basis” with “more winners in aggregate than losers,” Lagarde said.
Oil exporting countries will take a financial hit, while oil importing countries will see an economic boost from the price decline, she said. Countries that pay fuel subsidies should take the opportunity to remove those subsidies and spend the money elsewhere, she said.
Lagarde also cited the strong dollar and innovation in information technology, on the West Coast of the United States and by young entrepreneurs in China, as positives for the global economy.
After a 20-minute interview conducted by Fox Business Network anchor Maria Bartiromo, Lagarde took questions from the audience.
She fielded questions in finance in Mongolia and Portugal, youth unemployment and the viability of crypto currencies.
She dismissed the notion that a move by the Federal Reserve to raise interest rates, as the Fed has signaled it is considering, would upset world markets.
“I don’t know when it will be done, but (Federal Reserve Chair Janet Yellen) is going to be very attentive, very careful,” Lagarde said.
“It’s not going to come as a surprise. It will create some disruption,” but not in the way that the Fed’s tapering of its bond-buying program did in May 2013.
The International Monetary Fund will also support the creation of the Asia Infrastructure Investment Bank if the institution commits to financing vital needs that will push growth and aid the financial well-being of its members, Lagarde said. More than 50 countries have rallied to the bank.