Kristalina Georgieva, Managing Director of the IMF has stated yesterday that world economy is facing a new and major test, and it faces it with policy buffers depleted by the shocks of recent years. That puts countries in a difficult position. It also creates urgency for action to strengthen the economies for a world of rapid change. She noted that for the world economy, the IMF is projecting an increase in recession risk from 17 to 30 percent. However, growth is falling below 2 percent, not below zero, so there is a lot that is carrying the world economy—actually the real economy is functioning in a way that we are seeing no predominant risk, Georgieva opined.
She noted further that IMF’s earlier projections for a very vibrant U.S. economy were for 2.7 percent growth for this year. We have downgraded the United States—actually this is the largest of our downgrades—by 0.9 percent, to 1.8 percent for this year. But we see enough that carries the United States forward. And, of course, we recognize that there is work underway to resolve trade disputes and reduce uncertainty. I want to reiterate my message. Uncertainty is really bad for business, so the sooner this cloud that is hanging over our heads is lifted, the better for prospects for growth.