Lagarde forecasts ‘darker clouds looming’ at IMF spring meeting

Cantillon: No Ministers went to Washington but Lane there to soak up cautionary mood

Philip Lane, Governor of the Central Bank. Photograph: Cyril Byrne

Philip Lane, Governor of the Central Bank. Photograph: Cyril Byrne

 

The great and the good of the financial world are gathering in Washington for the annual spring meetings of the International Monetary Fund which continue over the weekend.

This year there is no ministerial presence from Ireland (though finance committee members Joan Burton and Gerry Horkan were in town earlier in the week for a parliamentary forum as part of the spring gathering)

Central Bank governor Philip Lane is in attendance, however.

Despite forecasts of a 3.9 per cent expansion in the global economy this year, policy makers have struck a cautionary tone. “The current global picture is bright, but we can see darker clouds looming,” IMF managing director Christine Lagarde warned.

While the threat of protectionism is looming large on events given the ongoing tensions between the US and China, alarm bells are also ringing over debt levels.

The IMF warned this week that the low interest rate environment has led to a build-up of debt which is even higher than the levels that existed before the last downturn.

On Friday, Brexit was also on the agenda as British chancellor Phillip Hammond arrived for the meetings. He put his best foot forward, expressing optimism that the British economy would pick up over the next year as plans for Brexit begin to take shape. Noting that businesses and households were putting off investments amid the uncertainty, he predicted that more clarity would bring more investment. He also said that he believes a “haemorrhaging of jobs from the UK into the EU” has been avoided because Britain has agreed to a transition period. On the issue of the hard border in Northern Ireland, however, there appeared to be little fresh thinking. Asked if Britain still believed it should stay outside the customs union, Hammond said he does not believe a customs union is a solution for the UK. How the British government intends to square that reality with avoiding a hard border in Northern Ireland seems as elusive as ever.

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