IMF sees global growth, but deflation risks rising

Thursday 16 January 2014 07.26
IMF chief Christine Lagarde says 'global growth is still too low, too fragile and too uneven'
IMF chief Christine Lagarde says 'global growth is still too low, too fragile and too uneven'

lnternational Monetary Fund chief Christine Lagarde has said that growth in the global economy was picking up, but warned of the "rising risks" of deflation.

"Momentum strengthened in the latter half of 2013, and should strengthen further in 2014 - largely due to improvements in the advanced economies," Ms Lagarde said.

She made her comments in a speech at the National Press Club in Washington last night.

The IMF managing director, however, declined to put numbers on the growth rate ahead of next week's update of the Fund's official forecasts.

But she pointed out that global growth, five years after the financial crisis, remains below its potential of about 4% a year, resulting in a tame risk of inflation worldwide.

"With inflation running below many central banks'  targets, we see rising risks of deflation, which could prove disastrous for the recovery," she said.

"Global growth is still too low, too fragile, and too uneven," she added,

Lagarde stressed that the 188-nation IMF can play "an especially valuable role" in fostering cooperation and coordination in the interconnected world.

"We need to continue to adapt and to reflect the changing dynamics of the global economy and our membership. That is why we need the continued support of our entire membership," she said, stressing the word "entire".