Jul 07, 2014
Global economic activity should strengthen in the second half of the year and accelerate in 2015, although momentum could be weaker than expected, IMF chief Christine Lagarde warned yesterday, hinting at a slight cut in the Fund's growth forecasts.Ms Lagarde said central banks' accommodative policies may have only limited impact on demand and that countries should boost growth by investing in infrastructure, education and health, provided their debt stays sustainable.
The IMF's update of its global economic outlook, expected later this month, will be "very slightly different" from the forecasts published in April, she said. In April, the IMF had forecast that global output would grow by 3.6pc in 2014 and 3.9pc in 2015.
"Global activity is picking up but the momentum could be less strong than we had expected because potential growth is weaker and investment ... remains subdued," she told an economic conference in southern France.
Ms Lagarde made a plea for more public investment, saying the "investment deficit" in both the public and private sectors was dragging down growth in most countries.
"Despite the many responses to the crisis ... recovery is modest, laborious, fragile, and measures to boost demand, despite the goodwill of central banks, will find their limits," she added.
"We must therefore take steps to boost efforts to strengthen growth," she added. "This is the opportunity in a number of countries to relaunch investment, without threatening the viability of public finances."
Ms Lagarde said the IMF did not expect a "brutal" slowdown in China. "Looking at emerging Asian countries, and in particular China, we are reassured because we do not see a brutal slowdown but rather a slight slowing of a growth that has become ... more sustainable and that we see at 7 to 7.5pc this year."
Source: Independent.ie