By Greg Ip

 

DAVOS - The global economy is slowing and faces significantly higher risks, the International Monetary Fund chief said Monday.

A global recession is not around the corner, Christine Lagarde told reporters at the release of the update to the IMF's economic outlook in Davos, Switzerland, during the World Economic Forum's annual meeting. "But the risk of a sharper decline in global growth has certainly increased," she added.

She cited in particular the threat of higher tariffs, which has already weakened financial markets globally which creates a headwind to economic growth.

The IMF's chief economist, Gita Gopinath, said tighter financial conditions are escalating risks to global growth. Emerging markets, she said, face headwinds from outflows of capital and weakening exchange rates.

The IMF assumes Britain will leave the European Union with a deal that smoothes the transition. A no-deal Brexit is a major risk to the outlook, she said.

The fund also assumes the U.S. will impose further tariffs on China. If it doesn't impose further tariffs--as a result of current negotiations underway between the two--that would represent a positive risk to the outlook, Ms. Lagarde said.

 

Write to Greg Ip at greg.ip@wsj.com.

 

(END) Dow Jones Newswires

January 21, 2019 09:13 ET (14:13 GMT)

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