The global economy, that has been on the rise lately, faces downside risks again. Clouds are gathering in a clear economic sky, and this cloudiness has every chance to become a real storm for the world economy. Such a gloomy weather forecast was given by IMF Director Christine Lagarde. “We are seeing storms in the forecast. And that storms are essentially three major clouds that I would identify for you”, Mrs. Lagarde said, speaking at the St. Petersburg International Economic Forum.
According to the IMF Director, the No. 1 problem is the level and the burden of debt that weighs on both sovereign states and corporations. Currently, this level is about USD 162 trillion which represents nearly 220% of the global GDP. “That is way more than the world has ever had including after the Second World War,” Mrs. Lagarde warned. Next, there is the second cloud which is financial fragility that may result in significant capital outflows from emerging countries. And we can already see its impact.
The third and the darkest cloud is determination of some countries to derange the system that presided over the trade relationships. “That cloud is actually trying to put a break on the terms and rules that govern the movement of goods and services around the globe. This cloud is clearly the one that we should be watching. And it is the one that, as presidents before me indicated, is largely based on the confidence,” Christine Lagarde said, hinting at a lack of trust to the Russian government.
