Dubai, UAE, January 26, 2019: At the World Economic Forum in Davos, CNN’s Richard Quest spoke to the Managing Director and Chairwoman of the International Monetary Fund Christine Lagarde.
During the interview, Lagarde disputed claims that there was another international recession around the corner but forecast a “very modest slowdown” and commented “the sun is not shining as brightly as it did”.
On the future global economy, Lagarde calls the inability of global players to come to agreements on trade and tariffs a “big risk”.
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On the global economy:
“A few rooms have been fixed a bit but there’s a lot of work that needs to be done and what we’re still saying today look it’s getting a bit darker and the sun is not shining as brightly as it did. We’re saying make sure your house is in order, prepare for the next crisis when it comes. We’re not saying there is a recession around the corner, we’re saying a crisis will come.”
On whether the economic slowdown should be defined as a crisis:
“What we have forecasted is a very modest slowdown and we’ve revised our forecast but what we’re seeing on the horizon is bigger risks and they’re closer to us.”
On predictions for global economic growth:
“It depends on what the policy makers decide to do. If they decide to do the right things which is focusing on having an economy which is resilient at home, which is inclusive for its people and if they decide to cooperate among themselves then no.”
On future risks to the global economy:
“I think they’re a few things which have changed in the last few years. I think for instance the financial sector has significantly improved in terms of architecture, capital ratios, less exposure. I think equally, the trade environment has worsened over the course of the last couple of years. There’s big risks on the horizon, the inability of the big players to find an arrangement on trade, on tariffs and on how they're going to deal with each other… it’s a constant struggle to make sure people are focused on what they have to do at home and talk to each other because we are completely interconnected and it’s a complex mechanism.”