IMF chief brushes off market swings, says reforms needed

IMF managing director Christine Lagarde said economies were also supported by plenty of financing available.
IMF managing director Christine Lagarde said economies were also supported by plenty of financing available.

DUBAI • Sharp swings in global financial markets in the past few days are not worrying since economic growth is strong, but reforms are still needed to avert future crises, the managing director of the International Monetary Fund (IMF) said on Sunday.

Ms Christine Lagarde, speaking at a conference in Dubai on global business and social trends, said economies were also supported by plenty of financing available.

"I'm reasonably optimistic because of the landscape we have at the moment. But we cannot sit back and wait for growth to continue as normal," she said in her first public comments on market movements since the latest round of turmoil at the end of last week.

"I'm ringing not the alarm signal, but the strong encouragement and warning signal."

Global stock markets were hit by wild fluctuations, with the US benchmark S&P 500 tumbling 5.2 per cent last week, its biggest weekly percentage drop since January 2016. The volatility was fuelled by investor worries about rising interest rates and potential inflation.

Ms Lagarde repeated an IMF forecast, originally issued last month, that the global economy would grow 3.9 per cent this year and at the same pace next year, which she said was a good backdrop for needed reforms. She did not give details of the reforms she wanted to see beyond saying the authorities needed to move to the regulation of activities, not entities.

"We need to anticipate where the next crisis will be. Will it be shadow banking? Will it be cryptocurrencies?" she said.

REUTERS

A version of this article appeared in the print edition of The Straits Times on February 13, 2018, with the headline 'IMF chief brushes off market swings, says reforms needed'. Print Edition | Subscribe