Washington, Oct 1 (IANS) International Monetary Fund (IMF) managing director Christine Lagarde said the global economy is approaching closer to a “new mediocre” scenario — the risk of low growth for a long time.
In the curtain-raising speech on Wednesday for the IMF-World Bank annual meetings, Lagarde expected that global growth will likely be weaker this year than last, with only a modest acceleration expected in 2016, given the disappointing and uneven growth of the world economy, Xinhua reported.
The IMF is expected to downgrade its outlook for the global economy in its flag-ship report World Economic Outlook, which will be released at the annual meetings in Peru next week.
In July, the IMF cut its forecast for the global growth this year by 0.2 percentage point to 3.3 percent and expected the global economy to grow 3.8 percent next year.
According to Lagarde, the advanced economies will see modest pickup in growth, while the emerging economies are likely to see their growth rates falling for the fifth consecutive year.
The IMF chief said that the prospect of rising interest rates in the US and the slowdown of China’s economy are contributing to uncertainty and higher market volatility and are heavily affecting the global economic outlook.
She called on commodity exporters to prepare for a prolonged period of low commodity prices in view of China rebalancing from commodity-intensive investment driven model to consumption and service-focused growth.
As the US Federal Reserve is poised to raise interest rates for the first time in nine years, economies, especially emerging economies, would need to improve their capacity to buffer shocks and enhance the monitoring of foreign currency exposures of major companies, said Lagarde.