IMF's Lagarde Says Economy Faces `Significantly Higher Risks'

The global economy is experiencing slower growth and rising risks, many of which are policy-related and interconnected. Higher tariffs and trade policy uncertainties have led to market volatility and tighter financing conditions, posing risks in a high-debt world. While a global recession is not imminent, the risk of a sharp decline in growth has increased. Policymakers are advised to address vulnerabilities and prepare for potential slowdowns by leveraging existing growth to create policy space. Economies should aim to be more resilient, inclusive, and collaborative, with a focus on reducing government debt, data-dependent monetary policy, and economic reforms.

What are some of the interconnected risks affecting the global economy?

• Higher tariffs and trade policy uncertainties

• Increased government spending

• Rising employment rates

• Lower interest rates

What is the current likelihood of a global recession according to the transcript?

• Very high

• Already happening

• Not around the corner

• Imminent

What should policymakers focus on to prepare for potential economic slowdowns?

• Reducing trade

• Cutting public services

• Harnessing existing growth momentum

• Increasing taxes

How should countries aim to reduce high government debt?

• Through rapid privatization

• By increasing tariffs

• In a fair and growth-friendly manner

• By cutting all public spending

What is the role of exchange rates in economic resilience?

• To be ignored in policy making

• To remain fixed

• To act as shock absorbers

• To be controlled by the government