Lagarde warned that rising U.S. interest rates and a stronger dollar could lead to companies defaulting on their payments
The head of the International Monetary Fund (IMF), Christine Lagarde, has predicted a disappointing and uneven global economic growth next year, in an article for German newspaper Handelsblatt.
IMF Managing Director Christine Lagarde said the prospect of rising interest rates in the United States and an economic slowdown in China were contributing to uncertainty and a higher risk of economic vulnerability worldwide, Reuters reported.
"In many countries the financial sector still has weaknesses and in emerging markets the financial risks are increasing. All of that means global growth will be disappointing and uneven in 2016," said Lagarde.
Lagarde wrote about “potential spillover effects" with prospect of interest rates hike, adding that while countries other than highly developed economies were generally better prepared for higher interest rates than in the past, she was concerned about their ability to absorb shocks.
Lagarde warned that rising U.S. interest rates and a stronger dollar could lead to companies defaulting on their payments and that this could "infect" banks and states.
"Most highly developed economies except the USA and possibly Britain will continue to need loose monetary policy but all countries in this category should comprehensively factor spillover effects into their decision-making."