World faces disappointing growth in 2016 - IMF

Global economic growth will be disappointing next year and the outlook for the medium-term has also deteriorated, the head of the International Monetary Fund said on Wednesday.
IMF Managing Director Christine Lagarde said in Berlin, Germany the pros-pect of rising interest rates in the U.S. and an economic slowdown in China were contributing to higher risk of economic vulnerability worldwide.

 Lagarde said that the growth in global trade has slowed considerably and a decline in raw material prices is posing problems for economies based on these.
Besides, she said the financial sector in many countries still had weaknesses and financial risks were rising in emerging markets.
“All of that means global growth will be disappointing and uneven in 2016,” Lagarde said.
She noted that mid-term prospects had also weakened as low productivity, ageing populations and the effects of the global financial crisis dampened growth.
In October, the IMF forecast that the world economy would grow by 3.6 per cent in 2016.
Lagarde said the start of a normalisation of U.S. monetary policy and China’s shift toward consumption-led growth were “necessary and healthy” changes but needed to be carried out as efficiently and smoothly as possible.
The U.S. Federal Reserve hiked interest rates for the first time in nearly a decade this month and made clear that was a tentative beginning to a “gradual” tightening cycle.
There are “potential spill over effects”, with the prospect of increasing interest rates there already having contributed to higher financing costs for some borrowers, including in emerging and developing markets, Lagarde said.
While countries other than highly developed economies were generally better prepared for higher interest rates than previ¬ously, she was concerned about their ability to ab¬sorb shocks.