DUBAI–The head of the International Monetary Fund is warning governments around the world to prepare for a possible economic storm, pointing to “four clouds” on the horizon.
"The bottom-line – we see an economy that is growing more slowly than we had anticipated," IMF Managing Director Christine Lagarde told the World Government Summit in Dubai.
In January, the IMF lowered its global economic growth forecast for this year from 3.7% to 3.5%.
Lagarde told the meeting her concerns and those of the IMF are in "four clouds" that could undermine the global economy and lead to a “storm.”
Those four clouds include trade tensions and tariff escalations, financial tightening, uncertainty related to Brexit, and the effects from an accelerated slowdown of the Chinese economy, she said.
Lagarde said trade tensions, primarily between the United States and China, are already having a global impact.
‘No Idea’
"We have no idea how it is going to pan out and what we know is that it is already beginning to have an effect on trade, on confidence and on markets," she said in remarks to the meeting, before adding a warning to governments to avoid protectionism.
Lagarde also cited concerns around risks posed by rising borrowing costs within a context of "heavy debt" racked up by governments, firms and households.
"When there are too many clouds, it takes one lightning (bolt) to start the storm," she said.