Global downside risks on the horizon — IMF’s Lagarde

“I have been in politics myself”, International Monetary Fund Managing Director Christine Lagarde said during an online news conference. Although the global economy is recovering, Lagarde said, growth is still “fragile” and “faces a few downside risks”. She said the recent volatility won’t dampen China’s hopes of having its yuan currency included in the IMF’s emergency reserves, which countries access in times of need. The International Monetary Fund expects the eurozone economy to grow 1.5 per cent this year and 1.7 per cent in 2016; it expanded just 0.8 per cent in 2014.

“Fiscal policies, structural reforms, financing and debt restructuring are four key legs for a Greek solution”, said Lagarde, adding that she was focused more on how Greece acted than what people said about the reforms that creditors pressed for.

“What will be critical, in my view, is what the Greek authorities actually are prepared to do-not the words around it, not the political noise that is often a necessity”, she said.

Lagarde said no one should be surprised that Chinese authorities have taken steps to “maintain an orderly movement”. “What matters is what you do”.

“It’s not a very well-established, long-standing market that has been around for decades and decades, as has been the case in either the United States or some of the European Union markets”, she said.

Lagarde noted that a drop in worldwide commodity prices is likely to hurt emerging market economies.

However, Lagarde had urged the Fed to delay the rate hike until 2016, citing the fragility of the global economic recovery.

Lagarde shrugged off a recent selloff in Chinese stocks, noting that China’s shares are still 80 per cent higher than they were a year ago. “We will continue to do the work, and I don’t think we’ll be unduly derailed by a few market variations that we’ve seen recently”.