Global economic growth is projected to firm up in 2020, but risks remain tilted to the downside, according to a communique by the International Monetary and Financial Committee(IMFC), the main advisory panel of the IMF’s 189 member countries.
The world economy will likely grow 3.3 per cent this year, the slowest expansion since 2016 and 0.2 percentage points below the global lender’s estimate from January, the committee added during the annual IMF/World Bank annual spring meetings.
Risks include “trade tensions, policy uncertainty, geopolitical risks, and a sudden sharp tightening of financial conditions against a backdrop of limited policy space, historically high debt levels, and heightened financial vulnerabilities,” the committee further noted.
“To protect the expansion, we will continue to mitigate risks, enhance resilience, and, if necessary, act promptly to shore up growth for the benefit of all,” Christine Lagarde, IMF Managing Director said.
The IMFC statement marks heightened concern compared with its last meeting six months ago, when it said growth remained strong even amid an “uneven” recovery.
While the prior statement in October urged central banks to “maintain monetary accommodation” in places where inflation was below targets and tighten policy “where inflation is close to or above target,” the latest missive was more agnostic.
It said “monetary policy should ensure that inflation remains on track toward, or stabilizes around targets, and that inflation expectations remain anchored.”