IMF chief warns trade restrictions creating 'low growth trap'
The IMF has also signaled it expects to downgrade its forecasts for US growth due to sub-par performance in the first half of 2016. Photograph: (AFP)
Ahead of annual meetings of the IMF and the World Bank, the head of the International Monetary Fund Christine Lagarde warned against protectionism and trade restrictions.
Lagarde, the IMF's managing director, said the despite signs of current global recovery, the economy was still fragile.
The global economy risked prolonged low growth and advanced economies faced painful inequality, she said.
"Especially for advanced economies, while there are some good signs the overall growth outlook remains subdued," Lagarde said in prepared remarks delivered at Northwestern University, near Chicago.
"We continue to face the problem of global growth being too low for too long, benefiting too few," she added.
Lagarde advised governments to preserve policies that had helped the recovery so far, persisting in trade liberalisation while helping workers who have been displaced by off-shoring, outsourcing and new technologies in order to create "inclusive growth."
"The same applies in reverse. Policies that hurt growth will have real consequences - both for the world at large and very often for the very people they are meant to protect," she said.
In recent weeks, the IMF has warned that high debt, weak demand, eroding work forces and labor skills were weakening incentives for investment and slowing productivity.
Lagarde said it threatened to create a "low growth trap."
The IMF has also signaled it expects to downgrade its forecasts for US growth due to sub-par performance in the first half of 2016.
(WION with inputs from agencies)