Global economic growth likely to be weaker than earlier expected- IMF chief says
IMF Managing Director Christine Lagarde said Tuesday that the organization expects global economic growth to weaken and that Asia, while expected to lead growth, risks slowing further due to the recent volatility in financial markets, according to marketwatch.com.
Ms. Lagarde said in a speech at the University of Indonesia, during a visit to the world's fourth-most populous country, that global growth was threatened by two forces: "A weaker-than-expected recovery in advanced economies and a further slowdown in emerging economies, particularly in Latin America."
In a quarterly report in July, the Washington-based International Monetary Fund reduced its forecasts for global growth to 3.3% from 3.5%. That reflects growth of 2.1% in advanced economies and 4.2% in what the IMF calls emerging markets and developing economies.
"Asia as a region is still expected to lead global growth," Ms. Lagarde said. But even in Asia, the pace "is turning out a little bit slower expected--with the risk that it may even slow further given the recent spike in global risk aversion and in financial market volatility."
Ms. Lagarde said emerging economies like Indonesia "need to be vigilant to handle potential spillovers from China's slowdown and tightening of global financial conditions."
She said that Indonesia, Southeast Asia's largest economy, would benefit from further trade liberalization and said it would it should follow in the footsteps of Japan, South Korea and China in "engaging more fully with the world."
Indonesia has been deeply affected by the global slowdown due to a fall in demand from principal market China for its coal and other commodities. The rupiah has fallen to the weakest level against the dollar in 17 years and growth slipped to a six-year low in the second quarter. -0-