International Monetary Fund managing director Christine Lagarde talks during a news conference ahead of the annual meetings of the International Monetary Fund and World Bank in Bali, Indonesia, on October 11, 2018. Mechanisms of multilateral global policy cooperation are under strain, notably in trade, and need strengthening'.
But the severity of the impact from such shocks will be determined by vulnerabilities including growing non-financial debt levels now exceeding 250 percent of GDP, a decline in underwriting standards outside the traditional banking sector and elevated asset prices that could drop sharply.
Lagarde also highlighted the increase in trade barriers that could disrupt the performance of global economic growth.
Financial Tensions It said after years of an extremely supportive financial environment, the global economy remains vulnerable to a sudden tightening of financial conditions.
He said the Nigerian government needs to shore up its tax and non-oil revenue to enable it finance infrastructure and social intervention programmes ahead of a looming global economic meltdown. It wants decisive policy action and significant external financing to stabilise the economy.
Lagarde said her advice was in three parts: "De-escalate".
Global growth is expected to remain steady at 3.7 per cent in 2020, as the decline in advanced economy growth with the unwinding of the USA fiscal stimulus and the fading of the favorable spillovers from United States demand to trading partners is offset by a pickup in emerging market and developing economy growth.
"Trade deficits don't (necessarily) mean cheating by the other side".
"All the accusations against China are completely trumped up".
That would include boosting foreign currency reserves that could be used in a crisis, as well as working with local bond markets to build a local investor base, rather than relying on financing from overseas.
He said Pakistan is burdened due to debts incurred by the previous government and his government is constrained to borrow more money to pay back those debts.
Despite the Federal Reserve's interest rate increases, financial conditions "have eased further" in the USA as equity valuations have stayed lofty. Pakistan is also seeking fresh loans from China, which has already heavily invested in transport and energy, as well as Saudi Arabia.
"Those issues need to clarified, need to be understood and need to be agreed, which is why we start to advocate the de-escalation, sitting around the table and actually improve the system as it is so that it works better for all, so it is fair in many ways", she said.