Lagarde Sees Subdued Global Growth as IMF Reviews Forecasts

The International Monetary Fund sees continued sluggish global growth as it reviews its economic outlook, Managing Director Christine Lagarde said.

“The IMF will release its updated forecasts in a few weeks,” Lagarde said in a speech today at the U.S. Chamber of Commerce in Washington. “For now, let me say that while we are seeing some signs of recovery, global growth remains subdued.”

The fund will release its new predictions Oct. 8, three months after cutting its global forecasts to 3.1 percent this year and 3.8 percent in 2014. Since then, developed economies such as the U.S. have become growth engines while some of their emerging-market counterparts decelerate, the fund staff said in a note to Group of 20 nations this month.

Speaking to reporters on yesterday’s decision by the Federal Reserve to refrain from cutting back on monetary stimulus, Lagarde said the move was in line with the fund’s advice for the U.S. economy.

“The IMF has always said that it should be gradual, that is should be based on data, with clear indication of what the criteria would be. We said it should be well communicated and we advocated a dialogue,” Lagarde said. “So, clearly the decision that was communicated yesterday and the various comments made by the chairman show that it’s exactly what we at the fund have advocated.”

The Federal Open Market Committee yesterday didn’t reduce the $85 billion pace of its monthly securities buying, spurring a rally in global equities as investors repositioned for a more accommodative central bank.

Lagarde also said the U.S. economy’s growth rate would be below 2 percent this year, and about one percentage point more next year. The country must fix its public finances, amid political uncertainty about the budget and the debt ceiling, she said.

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