IMF Chief: Clouds over Global Economy are Getting Darker by the Day

Risks to the global economic outlook are on the rise after G-7 countries are closer to an escalating trade war.

“The clouds on the horizon that we have signaled about six months ago are getting darker by the day -- and, I was going to say, by the weekend,” IMF chief Christine Lagarde said at a news conference in Berlin on Monday.

Her remarks came after the two-day of meeting of the G-7 countries. While other G-7 countries lobbied unsuccessfully for the US to reverse new tariffs on imported steel and aluminum, Trump threatened to stop trading with them and challenged them to eliminate all tariffs and subsidies.

Lagarde said the biggest and darkest cloud over the global economy is the risk of a deterioration of confidence by attempts to challenge the way in which trade has been conducted, in which relationships have been handled, and the way in which multilateral organizations have been operating.

The fund estimates 3.9% of growth for the global economy this year and next—the fastest since 2011, but also warns that growth will weaken because of higher interest rates by central banks, China’s continuous gradual slowdown and less fiscal stimulus in the US.