IMF's Lagarde says global economic growth is slowing

International Monetary Fund Managing Director Christine Lagarde speaks at the Brookings Institution Sept 22, 2015 in Washington, DC. Lagarde said growth was picking up in the euro area and Japan and still looked robust in the United States and Britai
International Monetary Fund Managing Director Christine Lagarde speaks at the Brookings Institution Sept 22, 2015 in Washington, DC. Lagarde said growth was picking up in the euro area and Japan and still looked robust in the United States and Britain.PHOTO: AFP

WASHINGTON (REUTERS) - A relentless deceleration in the economies of the developing world will cause global growth to slow this year and only pick up a bit more pace in 2016, the head of the International Monetary Fund said on Wednesday.

IMF Managing Director Christine Lagarde said growth was picking up in the euro area and Japan and still looked robust in the United States and Britain.

"The not-so-good news is that emerging economies are likely to see their fifth consecutive year of declining rates of growth," Ms Lagarde said in prepared remarks, warning they could be hit by an extended period of low commodity prices.

"Global growth will likely be weaker this year than last, with only a modest acceleration expected in 2016," she said.

In a speech that previewed a report on global growth due next month, Ms Lagarde held back from giving specific estimates.

But her comments appeared to be more pessimistic than the global lender's forecast made in July, just before global financial markets erupted into turmoil over concerns that China's economy could crash.

Ms Lagarde said China needs to keep trying to rebalance its economy away from commodity-intensive investment but also must be careful to safeguard "demand and financial stability."

In a survey of the global economy, she said growth was picking up in the euro area and Japan and still looked robust in the United States and Britain.

"The not-so-good news is that emerging economies are likely to see their fifth consecutive year of declining rates of growth," she said, warning the developing world could be hit by an extended period of low prices for the commodities they produce.

"Global growth will likely be weaker this year than last, with only a modest acceleration expected in 2016," she said.

In July, the IMF forecast a marginal slowdown in global growth this year to 3.3 per cent from 3.4 per cent in 2014, with a rebound to 3.8 per cent growth in 2016.