La­garde doesn’t see ‘el­e­ments of re­ces­sion’ in near term

Daily Observer (Jamaica) - - INTERNATIONAL -

WASH­ING­TON, United States (AFP) — De­spite some uncer­tainty and mar­ket volatil­ity, the United States is not likely to see an eco­nomic con­trac­tion in the near term, IMF chief Chris­tine La­garde yes­ter­day.

On a day when Wall Street has dropped more than two per cent, La­garde said “there’s a ques­tion mark about growth prospects go­ing for­ward” but the con­cerns are “a lit­tle bit over­done”.

“I don’t see the el­e­ments of re­ces­sion in short or­der,” she said on CNBC, and the IMF has fore­cast 3.7 per cent US growth next year which “is not bad”.

How­ever, she said the Fed­eral Re­serve was “prob­a­bly go­ing to slow down” its rate in­creases as they look at eco­nomic data.

The US cen­tral bank has raised its bench­mark lend­ing rate three times this year and is widely ex­pected to do so again on De­cem­ber 19 but has sig­nalled that it may slow or even pause next year as the econ­omy loses some steam.

La­garde de­clined to make a rec­om­men­da­tion to Fed pol­i­cy­mak­ers but said their moves will de­pend on “their read­ing of the state of the econ­omy,” and should be “well com­mu­ni­cated” since US mon­e­tary pol­icy has an im­pact on economies around the world.

Asked about the im­pact of the tar­iff bat­tle be­tween the United States and China, La­garde said if it stopped now the di­rect hit to their economies would be “min­i­mal”.

But she warned that “if you add the in­di­rect dam­age if you’re fac­tor­ing con­fi­dence, mar­ket ap­pre­hen­sion and un­cer­tain­ties...then you’re talk­ing about much more than that”.

The Wash­ing­ton-based cri­sis lender has cal­cu­lated that an es­ca­la­tion of the trade war could cut eight-tenths of a point off global growth by 2020, she said.

But she said the week­end truce be­tween the US and China gave rea­sons for op­ti­mism and the 90-day time frame was enough to es­tab­lish a frame­work for fur­ther ne­go­ti­a­tions.

How­ever, with com­plex is­sues like in­tel­lec­tual prop­erty rights, “it’s go­ing to take a long time”.

Chris­tine La­garde

Newspapers in English

Newspapers from Jamaica

© PressReader. All rights reserved.