Ahead of G20 meet, IMF warns about Brexit uncertainty

RSTV Bureau

IMF-MD-Christine-Lagarde-Mumbai-10032016--001Ahead of the key G20 meeting where finance ministers and central bankers will converge for two days in China to discuss global economic gloom, the International Monetary Fund chief Christine Lagarde said the uncertainty surrounding Brexit should end as soon as possible.

“Our first and immediate recommendation is for this uncertainty surrounding the terms of Brexit to be removed as quickly as possible so that we know the terms of trade and the ways in which the United Kingdom will continue to operate in the global economy,” said Lagarde while addressing a news conference in Beijing.

Lagarde’s statement came after she met Chinese premier, Li Keqiang, leaders of the World Bank, World Trade Organization and other bodies.

The crucial gathering of finance officials of the Group of 20 major economies is scheduled to take place in the weekend.

Post Brexit, the IMF cut this year’s global growth forecast by 0.1 percentage points to 3.1 per cent in a report that was released earlier this week.

The shockwaves of the British vote forced IMF to cut the forecast, said Lagarde.

However she also added that before the British vote, the IMF had been preparing to raise its global growth forecast by 0.1 percentage points due to improvement in Japan, China and the 17-country euro zone.

“Unfortunately, the United Kingdom decided to go for Brexit,” said Lagarde, the former French finance minister.

Investors are watching the G20 meeting for any sign the United States, Germany, China and other major economies may agree on joint action to accelerate a weak global economic recovery.

A similar meeting in February in Shanghai ended with a joint statement that said coordinated action was impossible because major countries were at different points in their economic cycles.

US Treasury Secretary Jacob Lew, speaking to reporters in Athens before flying to China, downplayed the likelihood of joint action.

“I don’t think this is a moment that calls for the kind of coordinated action that occurred during the Great Recession in 2008 and 2009,” said Lew.

“It really is a moment where we each need to do what we can to ensure that where growth is soft it gets stronger and that prospects for the medium- and long-term are improved,” he added.

(With inputs from agencies)