Lagarde conceded that global growth in 2016 is set to be “modest” and “uneven” and faces risks, including problems in emerging markets such as Brazil. While she’s still the front-runner and analysts said the case is unlikely to derail her reappointment, the prospect of a politically charged trial in her home country may still complicate her future at the International Monetary Fund.
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Haruhiko Kuroda, Japan’s central bank chief, said that China’s slowdown is due to the challenge of re-balancing its economy.
In an update to its World Economic Outlook released on Tuesday, the Washington-based body said growth was put at 3.4 percent this year and 3.6 percent in 2017.
European policymakers have said that a strategy on how to handle, process and relocate migrants has to be agreed upon within the next six to eight weeks – before spring arrives and many more people escaping conflicts attempt the hazardous crossings, mainly into Greece and Italy.
Though headline inflation in Japan is now around zero, Kuroda said there are some positive trends if volatile factors such as oil are stripped out.
“(It) is simply the worst start of any year on the record on financial markets ever, it’s simple”, French banker Tidjane Thiam, the CEO of Credit Suisse, said at the same Davos session as Lagarde.
Mr Osborne said an agreement could be reached as early as February’s European Council meeting, as he called on policymakers to reach consensus so countries could re-focus on dealing with the refugee crisis, which Ms Lagarde said was the Fund’s other major concern.
“The basic lesson is not to be anxious about markets; we have some big issues, “commented Martin Wolf, Associate Editor and Chief Economics Commentator at Financial Times, but the United States, Europe and China look okay and they were the core of the world economic system”.
On the flip-side, she told a panel at the World Economic Forum, that a proper strategy on how to control and manage the flow of refugees could be beneficial for the European economy.
“One is Brexit (the U.K. leaving the European Union), and whether there is a deal between the United Kingdom and the rest of Europe”. The IMF has said eurozone economic growth could rise by 0.2 percentage points, as much as 0.5 percent in countries like Germany and Sweden.
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Osborne said there is “goodwill” to get a deal.
