The global economy has weakened since the International Monetary Fund last updated its forecast in late January, though a recession isn’t likely in the near term, Lagarde said Tuesday in remarks prepared for a speech at the U.S. Chamber of Commerce in Washington.
In January, the fund lowered its projection for world economic growth, forecasting expansion of 3.5 percent this year and 3.6 percent in 2020. It was the IMF’s second cut in the outlook in three months. The fund will release its new World Economic Outlook with an updated growth forecast on April 9.Her warning comes as global finance ministers and central bankers prepare to convene in Washington next week for the semi-annual meetings of the IMF and World Bank.
Given the state of the global economy, it’s important for policy makers to avoid missteps, she said. Monetary policy should remain accommodative where inflation is below target, while exchange-rate flexibility should be used as needed, according to Lagarde. Regulatory reforms aimed at strengthening the financial sector should continue, she added.
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