Lagarde: Three risks to the global economy

In a speech delivered in Frankfurt Christine Lagarde, Managing Director of the IMF, has downgraded her global economic outlook. “We see the baseline as slightly lower. But we also see downside risks a bit higher on the horizon and we don’t see much by way of upside.” Lagarde cited three factors underpinning her view. 1) China’s changing business model and as a result – lower growth 2) A prolonged period of low commodity prices and 3) Tightening of monetary policy that has just commenced and is likely to gather momentum. Lagarde has reiterated her call for countries to use all three major tools at their disposal to boost growth: structural reforms, fiscal stimulus and monetary policy. “The good news is that the recovery continues; we have growth; we are not in a crisis. The not-so-good news is that the recovery remains too slow, too fragile, and risks to its durability are increasing.” So where is the safest place for risk averse investors? (VIEW LINK)