Lagarde says the global economy has lost momentum since January

Global growth has lost momentum since the beginning of the year, leaving the global economy in a precarious position, he said. Christine Lagarde, Managing Director of the International Monetary Fund (IMF).

The global economy has weakened since the last update of IMF forecasts at the end of January, although a short-term recession is unlikely, Lagarde said in a speech. prepared for a speech before the American Chamber of Commerce on Tuesday. United States to Washington.

In January, the fund reduced its forecast for global economic growth and forecast an expansion of 3.5% this year and 3.6% in 2020. This was the second reduction in the IMF's outlook in three months . The fund will publish its new report Perspectives of the global economy with a growth forecast updated on April 9th.

"The global economy is at a" delicate moment, "Lagarde said.

His warning comes at a time when finance ministers and central bankers around the world are preparing to meet in Washington next week for the semi-annual meetings of the IMF and the World Bank. Although confidence was fueled by the Fed's shift in stance and signs of a trade deal between the United States. and in China, investors remain concerned about the risk of slowing global expansion ten years after the financial crisis.

Patience
Lagarde said the global economy would benefit from the patience of major central banks, as well as the increased stimulus of the Chinese government. The IMF predicts that global growth will recover "a bit" in the second half of 2019 and 2020, he said.

Even in this case, this rebound remains vulnerable to a large number of risks, including the exit of Britain from the European Union, the high level of debt of certain sectors and countries, trade and economic tensions. "a feeling of unease in the financial markets," says Lagarde.

Given the state of the global economy, it is important for policymakers to avoid mistakes, he said. Monetary policy should remain accommodative when inflation is below target, while exchange rate flexibility should be used as much as needed, according to Lagarde. It is necessary to pursue regulatory reforms whose aim is to strengthen the financial sector, he added.

High public debt and low interest rates have left "limited space for action when the next recession arrives, which will inevitably come," he said. "For many countries, this implies a smarter use of tax policy."

The market power of companies has increased, with higher price margins imposed by "a few very dynamic companies," a particularly pronounced trend in the digital economy, Lagarde said.

Market power
"I am not saying that we currently have a" monopoly problem "but I say that we must take the appropriate measures so that it does not become a problem," he said.

Lagarde reiterated his warning to countries to avoid imposing new tariffs. An increase in tariffs of 25 percentage points for all goods traded between the United States. and China would reduce annual production in the United States to 0.6 percent and up to 1.5 percent in China, he said.

"These are potentially self-inflicted injuries that should be avoided," said Lagarde.

High-level trade talks between the United States and China will resume its work in Washington this week in the hope that the world's two largest economies can reach an agreement ending their trade war.