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Opening Remarks by Christine Lagarde at World Economic Outlook Press Conference
January 21, 2019
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IMF Communications Department
MEDIA RELATIONS
Phone: +1 202 623-7100Email: MEDIA@IMF.org
Welcome and thank you all for coming today. This is the first time that the World Economic Outlook Update is presented by Gita Gopinath, our new Chief Economist.
We are incredibly excited to have Gita on our team, and we are both grateful to Klaus Schwab and the WEF for hosting us here in Davos.
In a moment, Gita and her deputy Gian Maria will take us through the WEO, but first I would like to give a brief overview.
As you know, in October the IMF cut its global growth forecast for 2019 and 2020, partly because of the negative effects of rising trade barriers. Today we are announcing a further downward revision of our forecast.
The bottom line is that after two years of strong expansion, the world economy is growing more slowly than expected and risks are rising.
Perhaps, being here in January, we might think of a winter-sports image:
If the world economy were a cross-country skier, she would have been moving at a relatively high speed last year, but now the slope is changing and pointing slightly uphill. This is still a good trail to be on, but it gets a little bit harder to keep up the pace.
And even as the world economy continues to move ahead, it is facing significantly higher risks, some of them related to policy.
These risks are now increasingly intertwined: think of how higher tariffs and rising uncertainty over future trade policy fed into lower asset prices and higher market volatility. This in turn contributed to tightening financial conditions, including for advanced economies, which is a major risk factor in a world of high debt burdens.
Does that mean that a global recession is around the corner? The answer is ‘no’—but the risk of a sharper decline in global growth has certainly increased. Add to this geopolitical worries and disappointing long-term growth prospects, and you have an economic picture with a clear message:
Address remaining vulnerabilities and be ready if a serious slowdown were to materialize.
For most countries, this means harnessing the existing growth momentum to create more policy room to act. The goal is to make economies more resilient and more inclusive, and to increase collaboration:
The goal is for us to be in a better position for a downturn, which history suggests is somewhere over the horizon, but also for unexpected developments.
The international community must come together to build a brighter future for all citizens. I have called this a “ new multilateralism.” And as our new outlook shows, the need for this kind of cooperation is more urgent than ever.
With that, let me turn it over to Gita.
