IMF’s Lagarde says global growth loses momentum amid trade tensions

WASHINGTON — International Monetary Fund (IMF) Managing Director Christine Lagarde said on Tuesday that global growth has lost momentum amid rising trade tensions and tighter financial conditions, but pauses in rate hikes will help boost activity in the second half of 2019.

Ms. Lagarde, in a preview of the April 12-14 IMF and World Bank Spring Meetings, said the global economy is “unsettled” after two years of steady growth, with the outlook “precarious” and vulnerable to trade, Brexit and financial market shocks.

In January, the IMF cut its global growth forecast for 2019 to 3.5% from 3.7%, and Ms. Lagarde signaled further cuts when the IMF releases new forecasts next week.

“We had this synchronized acceleration of growth a couple of years ago. Now it is synchronized deceleration and a slowing momentum across the spectrum,” Ms. Lagarde said in a panel discussion at the US Chamber of Commerce headquarters in Washington.

Ms. Lagarde said that the IMF does not anticipate a recession in the near term, and the Federal Reserve’s “more patient pace of monetary policy normalization” will help fuel growth in the second half of 2019 and into 2020.

She cautioned, however, that years of high public debt and low interest rates since the financial crisis a decade ago have left limited room in many countries to act when the next downturn arrives so countries need to make smarter use of fiscal policy.

This, Ms. Lagarde said, means striking a better balance between growth, debt sustainability and social objectives and acting to address growing inequality by building stronger social safety nets.