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Tag: International Monetary Fund

  • Trade disputes ‘ll reduce global GDP, says IMF

    ESCALATING trade wars between countries, if unchecked, could reduce global Gross Domestic Product (GDP) by one per cent over the next two years, International Monetary Fund (IMF) Managing Director Ms. Christine Lagarde has said.

    Ms. Lagarde, who stated this at the plenary session at the ongoing  2018  IMF  and the World Bank Group (WBG) Annual Meetings in Bali, Indonesia, said there  was urgent need to de-escalate those trade disputes immediately.

    She said apart from the fiscal and monetary threats to economies, countries were still grappling  with inequality, technology and sustainability threats. The IMF boss said policies should be put in place to effectively address these threats for collective economic growth.

    World Bank President Dr. Jim Yong Kim, who also spoke at the session declared open by the Indonesian President, Joko Widodo, said over the last 25 years, more than one billion people have been lifted out of extreme poverty. He gave the global poverty rate as being around 10 per cent, saying it is the lowest it had ever been recorded history.

    Kim said although the 10 per cent poverty rate recorded was one of the greatest achievements, the fact remains that some 736 million people are still living in extreme poverty – which is less than one dollar and 90 cents a day.

    He said: “A quarter of the world’s population lives on less than three dollars and 20 cents a day, nearly half of the people on earth live on less than five and a half dollars a day. The pace of poverty reduction is also slowing, which means that we have to accelerate our efforts on the three pillars of our strategy to achieve our goals.”

    Kim also said technology was changing the nature of work, adding that know-how and automation were replacing scores of tasks and doing away with some jobs.

    He added that innovation was changing the scope of existing jobs, creating new occupations and launching career fields that did not exist a few years ago.

    The World Bank boss said if technology is helping to raise aspirations and changing the nature of work,” the world has to answer the question of what people will do.

    The key, he noted, “is making the right investments in people by ensuring that they accumulate the health, knowledge and skills they need to realise their full potential.”

    On his part, President Widodo warned against trade wars, saying they would make nations poorer.

    He told the gathering that unilateral economic policies and trade wars would not increase the world’s wealth, but rather make nations and people poorer.

     

  • Trade disputes will reduce global GDP, says IMF

    Escalating trade wars between countries, if unchecked, could reduce global Gross Domestic Product (GDP) by one per cent over the next two years, the Managing Director, International Monetary Fund (IMF), Ms. Christine Lagarde, has said.

    Ms. Lagarde, who stated this at the plenary session at the ongoing 2018 IMF and the World Bank Group (WBG) Annual Meetings in Bali, Indonesia, said there  is the urgent need to de-escalate those trade disputes immediately.

    She said apart from the fiscal and monetary threats to economies, countries were still grappling with inequality, technology and sustainability threats, urging that policies should be put in place to effectively address these threats for collective economic growth.

    The World Bank President, Dr. Jim Yong Kim, who also spoke at the session declared open by the Indonesian President, Joko Widodo, said over the last 25 years, more than one billion people have been lifted out of extreme poverty. He gave the global poverty rate as being around 10 per cent, saying it is the lowest it had ever been in recorded history.

    Kim said although the 10 per cent poverty rate recorded was one of the greatest achievements, the fact remains that some 736 million people are still living in extreme poverty – which is less than one dollar and 90 cents a day.

    He said: “A quarter of the world’s population lives on less than three dollars and 20 cents a day, nearly half of the people on earth live on less than five and a half dollars a day. The pace of poverty reduction is also slowing, which means that we have to accelerate our efforts on the three pillars of our strategy to achieve our goals.”

    Kim also said that technology was changing the nature of work adding that technology and automation were replacing scores of tasks and doing away with some jobs. He also said that innovation was changing the scope of existing jobs, creating new occupations and launching career fields that did not exist a few years ago.

    He said if technology is helping raise aspirations and changing the nature of work,” the world has to answer the question of what people will do.?  The key, he pointed out, “is making the right investments in people by ensuring that they accumulate the health, knowledge and skills they need to realise their full potential.”

    On his part, President Widodo warned against trade wars, saying they will make nations poorer. He told the gathering that unilateral economic policies and trade wars do not increase the world’s wealth, but rather make nations and people poorer.

    He said the quest for economic dominance by the big economies would only worsen the world as there would be no winners or losers.

    He said: “While countries are busy fighting, a bigger threat is rising and there is no point of winning in a world of devastation. We should step up our efforts to ensure that the growth is inclusive and the normalisation of policy settings by major economies is well communicated and implemented in a timely manner with minimal adverse spillovers.”

    Widodo said while the global economic outlook was showing some positive signs, there were considerable risks to the outlook, saying it was still unclear whether the positive global growth momentum could be sustained over the longer term.

    He called for the establishment of a global mechanism to help countries cope with natural disasters. He warned that   climate change posed a greater threat, saying addressing it cannot be a one  nation responsibility. No country could be totally safe from the risk of disasters, he said, adding that disasters have caused major human, social, economic and financial impacts in many developed and developing countries of the world.

    “If left unchecked, the economic impact of natural disasters could become a serious impediment to our goal to eradicating poverty, as people lose their jobs and assets. For governments, natural disasters could potentially put pressure on the sustainability of budgets and thus we need to discuss feasible solutions to designing risk financing options, including through the establishment of a funding mechanism for disaster risk and disaster insurance,”

  • Nigeria seeks IMF’s support on tax collection

    The Federal Government is seeking assistance from the International Monetary Fund (IMF)  on modalities  for improving  tax collection, especially  from the International Oil Companies (IOCs), Finance Minister  Zainab Ahmed, has said.

    She told reporters  on the sidelines of the ongoing 2018 International Monetary Fund (IMF)/World Bank Group Meetings, in Bali, Indonesia, that government has to be in a position to develop tools  that could help pursue taxes, especially  ”from very large corporates, like international oil companies (IOCs).”

    The IOCs,according to her, has the    greatest tax potential in Nigeria.

    ”This is the industry that, from the Thabo Mbeki Report, shows that about 70 per cent of the illicit financial flows that go out of Africa, Nigeria included, are related to the extractive industry,” she said.

    “So we did ask for how we can effect transfer pricing and how we can stop the flows from that sector.”

    She said  these revenues are needed to enhance development.

    Mrs. Ahmed said Nigeria’s  delegation also met  with investors from different parts of the world and told them “the Nigerian story and made it clear to them that Nigeria is a good place to do business and that the returns you get from Nigeria are high, at about 14 per cent, as against about four per cent,” in other countries.

    She was confident that “the Eurobond we are trying to raise will have a positive outcome.”

     

     

  • African Economic Development: IMF tasks countries on performance

    The International Monetary Fund (IMF) has called on Nigeria, South Africa and Angola to ensure solid economic footing to accelerate African economic growth.

    The IMF Chief Economist, Mr Maurice Obstfeld, made this call on Tuesday in Bali, Indonesia at the unveiling of the October 2018 World Economic Outlook, a publication of the IMF.

    He observed that their proper footing would check impediment of the growth of the African economy.

    According to IMF, Nigeria, South Africa and Angola, the three largest economies in the continent are impeding the growth of African economy.

    Read Also:IMF to release World Economic Outlook

    He said that the aggregate growth rate for the continent was held down by the fact that the three largest economies were not performing up to their potentials.

    According to IMF, Nigeria, South Africa and Angola, the three largest economies in the continent are impeding the growth of African economy.

    “Nigeria’s growth is at 1.9 per cent this year to 2.3 per cent next year and South Africa with 0.8 per cent this year, Angola contracting by 0.1 per cent this year.

    “So the aggregate is over three per cent this year and close to four per cent next year and this is in spite of the fact that the largest economies in the continent are doing poorly.”

    Obtsfeld, however, said the continent could do much better once the countries got solid economic footing, particularly South Africa and Nigeria.

    “This is because they are really large countries and their economic activities will always have effect on their neighboring countries,’’ he said.

    According to the report, Africa’s growth performance varies according to countries, while about half of the expected pickup in growth between 2017 and 2018 reflects the growth rebound in Nigeria.

    “Nigeria’s growth is projected to increase from 0.8 per cent in 2017 to 1.9 per cent in 2018 and 2.3 per cent in 2019 (0.4 percentage point higher than in the April 2018 WEO for 2019).

    “This is buoyed by the impact of recovering oil production and prices,” the report indicated.

    It also said that inflation pressures in sub-Saharan Africa had broadly softened, with annual inflation projected to drop to 8.6 per cent in 2018 and 8.5 per cent in 2019, from 11 per cent in 2017.

    “For Nigeria, inflation is projected to fall to 12.4 per cent in 2018, from 16.5 per cent in 2017 and to rise to 13.5 per cent in 2019.

    The report said that global growth was projected at 3.7 per cent for 2018-19, which is 0.2 percentage point lower for both years than was forecast in April.

    “In United States, momentum is still strong as fiscal stimulus continues to increase.

    “However, the forecast for 2019 has been revised down due to recently announced trade measures, including the tariffs imposed on 200 billion dollars of US imports from China.”

    The IMF, however, advised countries to foster cooperation and work together to tackle challenges that extend beyond their borders.

    It said cooperative efforts were also essential to complete the financial regulatory reform agenda, strengthen international taxation, enhance cyber security and tackle corruption.

    It said that to strengthen the potential for higher and more inclusive growth, all countries should grasp the opportunity to adopt structural reforms and policies that raised productivity and ensure broad based gains.

    The IMF also advised that low-income developing countries should improve on their convergence prospects.

    It explained that continued progress towards the 2030 United Nations Sustainable Development Goals (SDGs) was imperative to foster greater economic security and better living standards for a rising share of the world’s population.

    “Given their generally high levels of public indebtedness, low-income developing countries need to make decisive progress to strengthen their fiscal positions while prioritising well-targeted measures to reduce poverty.

    “They must also boost the resilience of their financial systems,” it said.

  • Africa-China’s debt diplomacy

    Loans have been used as weapon of underdevelopment of Africa by the International Monetary Fund (IMF) and World Bank. Loans from China are irresistible because they come with less strings attached on matters such as governance, democracy or human rights. Bureaucrats too can easily get a cut without much accountability. Yet, the loans are like a Trojan horse. Its consequences will be far-reaching.

    While the British expanded the empire through conquest, China understands a subtle approach, which is sovereign debt. It is now the ammunition of choice for China to penetrate developing countries and get them to suit its expanding economic and military interests.

    China hosted leaders from across Africa for a summit in Beijing. The last summit was held in December 2015 in Johannesburg, South Africa, where Chinese President Xi Jinping announced $60 billion in funding support for infrastructure development in Africa. The Forum on China-Africa Cooperation included an eye-popping announcement of billions of dollars more in Chinese financing to build infrastructure across the continent. But these massive loans can come with steep and opaque conditions.

    China’s billion dollar loans to Africa will not transform the manufacturing sector on the continent. It is not a new argument that these Chinese loans will not bring good institutions, infrastructure, human capital and technology. The loans will not drive manufacturing-led growth in Africa. This is debt diplomacy between China and Africa.

    So far, the structural transformation that shifts productive resources from agriculture and mining to manufacturing – which has helped many countries achieve greater prosperity – has bypassed most African countries. The limited structural transformation in Africa has not translated into more jobs, because the manufacturing sector itself requires extensive reform.

    Therefore, what Africa needs is a manufacturing renaissance, with more local value-addition that would create more and better-paid jobs, and contribute to fulfilling the aspirations of the Agenda 2063. Chinese loans for Africa could not make African countries become more resilient to economic shocks and less dependent on natural resource exports. Africa can achieve ambitious goal if it taps into available opportunities, while mitigating the challenges it faces.

    It’s tempting for European countries and Americans to think this is not our problem. But as African countries sink deeper and deeper into Beijing’s carefully laid debt trap, the United States could pay a steep cost in reduced cooperation on counterterrorism and job creation.

    Chinese debt has become the methamphetamines of infrastructure finance: highly addictive, readily available, and with long-term negative effects that far outweigh any temporary high. This is particularly true in sub-Saharan Africa, where China has become the largest provider of bilateral loans. Forty percent of sub-Saharan African countries are already at high risk of debt distress; by having so much debt concentrated in the hands of a single lender, they are dangerously beholden to their supplier.

    Why does this matter? Because in Africa and elsewhere, governments have secured massive loans from Beijing using strategic assets—such as oil, minerals, and land rights— as collateral. If borrower nations find themselves unable to repay the loan, China can claim the strategic asset. Sri Lanka recently learned this the hard way and handed over control of the port of Hambantota, giving China a strategic foothold along a busy trade waterway.

    While Chinese debt diplomacy may not seem relevant to most Americans, it is a serious threat to US national security. Most directly, China’s crafty negotiations and seizure of strategic assets can limit US influence and access overseas.

    For instance, the tiny country of Djibouti is home to the most significant American military base in Africa. Thanks to Chinese loans, Djibouti’s debt-to-GDP ratio surged from 50 to 85 percent between 2014 and 2016. If Djibouti were to default and relinquish the port that resupplies the US base, American military capability in Africa and the Middle East could be seriously threatened.

    More broadly, unsustainable levels of debt can destabilize African states, which also compromises American security interests. Over-leveraged governments can get caught in a downward spiral of credit downgrades, reckless economic policies, and reduced spending on social services. With economic stagnation comes fewer opportunities for Africa’s fast-growing and young population. And the toxic brew of economic hopelessness and political disillusionment can drive disaffected youth toward violent extremism. That can threaten Americans abroad and, potentially, even at home.

    Finally, China’s debt diplomacy shuts out opportunities for US businesses. Not only do Beijing’s cheap infrastructure loans come with conditions to employ Chinese companies, they also set out technical specifications for projects like high-speed railways and wireless networks in a manner that favours Chinese firms. The combined effect of these efforts “would push the United States away from its current position in the global economy and move China toward the centre,” according to Jonathan Hillman, a fellow at the Center for International and Strategic Studies. China already earns $180 billion annually from its investments in Africa; if its debt diplomacy remains uncontested, it’s likely that even more revenues and jobs will flow to China, instead of the US.

    But this outcome is far from inevitable. The US has plenty of good options, but it needs to dramatically step up its game and support alternatives to Beijing’s aggressive finance initiatives. Perhaps most fundamentally, the US needs to focus on boosting African economic growth. Helping African states to strengthen investment climates and economic governance will help them attract more private sector capital and provide more entry points for US companies. A key component is assisting African efforts to increase transparency, so that all the costs and benefits of project finance options are openly known. Fully staffing US embassies and offering more technical assistance to evaluate loan agreements and investment contracts would be a good start.

    To date, the Trump Administration’s Africa policy has been adrift, defined more by racial epithets than any cohesive strategy or results. By comparison, China has a clear vision that will yield long-term benefits. In Africa and around the world, much more needs to be done to confront Chinese debt diplomacy. If not, the US will pay a heavy price in its commercial and national security interests.

    If not tamed, the loans from China will continue to subject poor nations into new rounds of dependency, and therefore, will lead them down a path to more underdevelopment.

    • By Inwalomhe Donald

    Benin City.

     

     

  • Swim if you can to stay healthy declares Christine Lagarde

    Managing Director of the International Monetary Fund (IMF) Christine Lagarde, has described swimming as a holistic sports which all should embrace for healthy living.  She stated this while featuring on CNN with Christian Amanpour on Tuesday.

    Swimming according to her does not only teach endurance, determination and patience but also teamwork all of which are essential in effective human relation

    Lagarde who as a teenager was a member of the French national synchronised swimming team revealed that she still swims normally but not synchronised swimming.

    “I still swim regularly, it is very good.  Keeps you healthy, teaches you endurance, you are able to hold your breath, yes I still do the swimming part but not synchronised swimming,” she said.

    The 62 year old Vegetarian is however not only into swimming but is a regular at the Gym and enjoys cycling.

    Lagarde was named as the next MD of the IMF for a five-year term, starting on 5 July 2011, replacing Dominique Strauss-Kahn.

    She was ranked the 5th most powerful woman in the world by Forbes magazine, and was re-elected by consensus for a second five-year term, starting 5 July 2016, being the only candidate nominated for the post of Managing Director. In 2017, Forbes ranked her Number 8 on their World’s 100 Most Powerful Women list.

     

     

     

     

     

     

     

     

  • IMF: Between global debt of $152 trillion and Africa’s $518 billion debt

    The International Monetary Fund (IMF) recommendation for African economic recovery has gap and IMF is exploiting the gap for its benefits. IMF is waging economic war on Africa by keeping silent on Italy’s $2.5 trillion debt and putting pressure on Africa that owes debt of $518 billion of the global debt of $152 trillion. I am worried over IMF’s negative comments on Africa.

    IMF has not explained why it has lost focus on $152 trillion global debt. What has Africa done wrong to IMF? Why is IMF victimising Africa? The IMF sees its measures as necessary and pre-determined – in most cases by the borrowing African countries having run-up what IMF called unsustainable external or budget imbalances when the global debt is $152 trillion and Africa’s share of the debt is $518 billion. IMF does not understand the strategic differences of African economy. In Nigeria, the Lagos economy is different from Sokoto’s economy.

    According to the IMF, global debt has risen to a record level of $152tn (£122tn) including Africa’s $518 billion debt. The IMF does not have a good historical record in Africa. A view of the many countries which have subjected themselves to the IMF doesn’t inspire confidence. Instead of bailing out countries, it has created a list of countries suffering from debt dependency. While the South African situation is getting more desperate, which calls for desperate measures, the idea to turn to the IMF is a bad idea and must be dismissed. There are a number of reasons why I think this is the case.

    Historical evidence suggests that IMF-administered rescue programmes are actually a recipe for disaster. They worsen rather than rescue the situation. These austerity measures would cause great suffering, poorer standards of living, higher unemployment as well as corporate failures. The current technical recession would be magnified into a full-blown crisis, leading to even greater shrinking of investment.

    Sub-Saharan Africa is not a homogeneous region. Some countries are still growing strongly, helped by declining energy prices. The present poor value of the naira has become an albatross on every aspect of our economy and national life. The revaluation of the naira is therefore fundamental to any meaningful economic reform. Otherwise we are deceiving ourselves.

    Although government borrowing has helped many African countries to boost their economies and improve human development, the progress recorded in these areas could be jeopardised if rising debt levels on the continent are not curbed, the International Monetary Fund (IMF) has said.

    The Director of African Department at the IMF, Mr. Abebe Selassie, stated that “Sub-Saharan Africa is confronting a pronounced rise in public debt of $518 billion. At the end of 2017, average public debt in the region was 57per cent of its Gross Domestic Product (GDP), an increase of 20 percentage points in just five years. While this is well below the peaks of the early 2000s, the current spike is concerning.”

    The main pretext for IMF intervention was to “help solve” the debt crisis that hit African countries in the late 1970s, following the combination of internal and external shocks, notably sharp fluctuations in commodity prices and skyrocketing interest rates. The remedy they proposed, known as stabilisation and structural adjustment programmes (SAPs), achieved the opposite, and contributed to worsening the external debt and exacerbating the overall economic and social crisis.

    • By Inwalomhe Donald

    Benin City, Edo State.

     

  • IMF: Nigeria’s $21.72tr debt poses financial stability risks

    The International Monetary Fund (IMF) on Wednesday gave a verdict on Nigeria’s $21.72 trillion ($70.99 billion) public debt position, saying it constitutes direct risk to the country’s financial stability.

    The IMF’s Financial Counselor and Director of the Monetary and Capital Markets Department, Tobias Adrian made the disclosure during the Global Financial Stability report presentation at ongoing IMF/World Bank Spring Meetings in Washington D.C, United States.

    The referenced Nigeria’s external debt and domestic debt figures above are as at December 2017 data from Debt Management Office (DMO) showed.

    Adrian said the Fund is ready to provide sound debt management assistance to Nigeria and other emerging market countries, in line with its debt sustainability framework for low income countries and emerging market economies.

    According to him, short-term risks to financial stability have increased, and medium term risks remain high while vulnerabilities in global markets may make the roads ahead bumpy, and put growth at risk.

    “Rising foreign debts remains a big risk to financial stability. The debts that are accumulated quickly are deteriorating and could pose financial stability crisis in the future in emerging markets,” he disclosed.

    Adrian said the Fund has continued to track debt issuance programmes in emerging markets which Nigeria belongs, adding that bank-dollar liquidity mismatches also remain a concern.

    The IMF director said the international US-dollar balance sheets of non-US banks rely on short-term or wholesale sources for about 70 per cent of their funding, a practice that could leave banks exposed to dollar funding problems in the event of strains in markets. He therefore advised policy makers to ensure that the post-crisis regulatory reform agenda is implemented, and should resist calls for rolling back reforms.

    “Our growth risk analysis which links financial conditions to the distribution of future global growth indicates that, under a severely adverse scenario, growth could be negative three years from now. Stretched valuations across many asset classes, borrowing by emerging markets and low income countries and bank-dollar liquidity mismatches remain vulnerabilities,” he said.

    He said that issuance of riskier bonds has surged, adding that debt sustainability in emerging markets and low income countries has deteriorated, and a more complex creditor composition poses challenges for any future debt restructurings.

    According to Adrian, pick-up in inflation might lead to a more rapid withdrawal of monetary accommodation by central banks leading to sudden tightening in financial conditions and a sharp fall in asset prices.

    Adrian advised central banks to continue to normalize monetary policy, and communicate their decisions clearly while addressing financial vulnerabilities by strengthening fundamentals and building buffers.

    Also speaking, IMF’s Director at the IMF’s Fiscal Affairs Department, Victor Gasper, said public debts are at historic high in emerging markets, and have been associated with fiscal crises. He added that debt servicing is also rising in countries with high inflation rates. He said there was no room for complacency, and that countries should strengthen their tax capabilities and deploy the resources in funding health, education and public infrastructure.

    Gasper, who spoke at the Fiscal Monitor session, said that counties will be better placed to tackle looming risks if they build strong public finances in good times.

    He said that in emerging market economies, debt at almost 50 per cent of Gross Domestic Product (GDP) on average is at levels that in the past have been associated with fiscal crises adding that average debt was only higher during the 1980s.

    He said that in the last 10 years, emerging market economies have been responsible for most of the increase in the $164 trillion global debt. “We urge policy makers to avoid pro-cyclical policy actions that provide unnecessary stimulus when economic activity is already pacing up. Instead, most countries should deliver on their fiscal plans and put deficits and debt firmly on a downward path,” he stated.

  • IMF seeks confirmation of MPC members, CBN directors

    IMF seeks confirmation of MPC members, CBN directors

    International Monetary Fund IMF, has advised Nigeria to confirm the appointments of the Central Bank of Nigeria’s (CBN’s) board of directors and members of the Monetary Policy Committee (MPC). The advice was contained in the IMF Article IV Consultation with Nigeria released on Wednesday.

    A few directors of the Fund urged confirmation of the appointments of the CBN’s board of directors and members of the MPC in the interest of the economy. The directors also commended the CBN’s tightening bias in 2017, which they said, should continue until inflation is within the single digit target range.

    They recommended continued strengthening of the monetary policy framework and its transparency, with a number of directors urging consideration of a higher monetary policy rate, a symmetric application of reserve requirements, and no direct central bank financing of the economy.

    The document also raised hope on the state of the economy, but made several recommendations including need for the country to revive the non-oil sector.

    The Executive Board of the IMF which concluded the Article IV consultation with Nigeria on March 5 said the economy is exiting recession but remains vulnerable.

    The Central Bank of Nigeria (CBN)-led MPC meeting planned for January 22nd and 23rd, 2018 failed to hold due to the failure of the Senate to approve nominees to replace eight members of the committee whose tenure expired last December.

    The MPC needs six members to form a quorum, with two expected to be the CBN Governor and a Deputy Governor of the apex bank.

    President Muhammadu Buhari had appointed new members for the MPC and the list of the nominees is already with the National Assembly for approval.

    In an emailed report to investors, Managing Director, Financial Derivatives Company Limited, Bismarck Rewane, confirmed that President Buhari had in October, nominated the former Executive Director of a top bank, Aisha Ahmad, as Deputy Governor of CBN to replace former Deputy Governor, Economic Policy, Sarah Alade who retired last year.

    Four lecturers from National universities, including Aliyu Sanusi (Ahmadu Bello University) and Adeola Adenikinju (University of Ibadan), were also nominated by the President.

    The MPC held its sixth and final meeting for 2017 from November 20 to 21 and in line with consensus expectation, the committee members overwhelmingly kept policy rates unchanged whilst emphasising on the need to consolidate on gains in external balance and domestic price stability.

    The November meeting was held against the backdrop of moves by the apex bank to begin phasing out accommodative monetary policy put in place to sustain growth – rising commodity prices and improving domestic macroeconomic conditions anchored by recovery in external sector variables.

     

  • Global economic recovery gaining momentum – IMF

    Global economic recovery gaining momentum – IMF

    International Monetary Fund Managing Director Christine Lagarde said on Wednesday global economic recovery was gaining momentum.

    Lagarde said ahead of next week’s IMF and World Bank spring meetings in Washington that the growth could be cut off by a “sword of protectionism’’ now threatening global trade.

    She argued for countries to use fiscal and monetary policy to boost demand and structural reforms to make economies more efficient to sustain the recovery.

    She said for the first time in years, the global economy “has a spring in its step’’.

    “The good news is that, after six years of disappointing growth, the world economy is gaining momentum as a cyclical recovery holds out the promise of more jobs, higher incomes and greater prosperity going forward.

    “The prospects are better for advanced economies, where manufacturing activity is stronger, as well as for emerging and developing economies, which will contribute more than three quarters of global GDP growth this year.

    “Higher oil and commodity prices have aided many commodity exporters, but their revenues will stay well below the boom years.

    “At the same time, there are clear downside risks: political uncertainty, including in Europe, the sword of protectionism hanging over global trade, and tighter global financial conditions that could trigger disruptive capital outflows from emerging and developing economies,’’ Lagarde said.

    She said restricting trade would be a “self-inflicted wound’’ that would disrupt supply chains and raise prices for components and consumer goods, hitting the poor hardest.

    She also voiced concern about lagging productivity growth and called for more investments in research.

    According to her, as IMF prepares to release new growth estimates on April 18, trade promotes efficiency and innovation.

    She cited forthcoming IMF research that estimated that China’s integration into the global trading system accounted for as much as 10 per cent of advanced economies’ overall productivity gains between the mid-1990s and the mid-2000s.

    Lagarde said governments also needed to find better ways to aid workers who were displaced by technology and trade flows.

    “There is no magic formula. But we do know that greater emphasis on retraining and vocational training, job search assistance, and relocation support can help those affected by labour market dislocations,” Lagarde said.