IMF forecasts strengthening economic growth in second half
Reuters in Aix-en-Provence
Global economic activity should strengthen in the second half of this year and accelerate in 2015 although momentum could be weaker than expected, International Monetary Fund managing director Christine Lagarde said yesterday, adding that the IMF did not expect a sharp slowdown in China.
Lagarde said central banks' accommodative policies could have only limited impact on demand and that countries should also act to boost growth by investing in infrastructure, education and health, provided their debt stays sustainable.
The IMF's update of its global economic outlook, expected this month, would be slightly different from the forecasts published in April, she said. The IMF had at that time forecast that global output would grow by 3.6 per cent in 2014 and 3.9 per cent 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 said.
Lagarde said 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 told a conference in southern France.
"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."
She 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 7.5 per cent this year."