IMF getting more cautious with the world economy in 2016
On Germany’s Handelsblatt newspaper, Ms. Christine Lagarde predicted world economic growth in 2016 may be disappointing, while the medium-term economic outlook is also deteriorating. Ms Lagarde said the US increased the base rate by 0.25% this month, and the Chinese slowdown is causing global economy is increasingly unstable. In addition, the growth in global trade has declined significantly, and the decline in raw material prices has posed many problems for the economy depends on them. Meanwhile, the financial sector in many countries is still declining and risk in emerging markets is rising. 
CEO of IMF – Christine Lagarde. “All of this means that world economic growth may be uneven and disappointing in 2016,” she said and stressed the medium term economic outlook is weakening due to low production yields , an aging population and the impact of the global financial crisis. In May 10th , the IMF predicted that the world economy could grow 3.6% in 2016. However, this figure is also lower than the 3.8% estimated that this organization launched in July , Reuters said. She also noted that normalization of US monetary policy, along with the shift of China’s consumption changes “necessary and healthy economy.” But these policies need to be implemented effectively and smoothly as possible. This month, the US Federal Reserve (Fed) raised interest rates by 0.25% Basic first time in nearly a decade and claimed the move would put the US entered the monetary tightening cycle a a “gradual”. This signal is almost entirely American escape the “dark period” of the global financial crisis. But it would also make the cost of borrowing becomes more expensive for some countries, including emerging economies and developing countries. Ms Lagarde warned that the United States raised interest rates and a stronger dollar may cause many companies insolvent, thereby affecting banks and state in this country. But she said that the risks related to these changes can be overcome based on high demand, financial stability and structural reform. “Most developed economies, except the United States and possibly the UK, will continue to maintain loose monetary policy. But all these countries should consider the consequences of those decisions,” she said . The emerging economies also need to closely monitor foreign exchange risk that large companies face. The countries exporting raw materials should also use fiscal policy to adapt to the situation of low prices. Other countries should focus budget restructuring through encouraging growth through tax reform and energy prices or a change in spending priorities, she said.
