IMF’s Lagarde: 2016 will be “disappointing”

Do I believe the InternationalMonetary Fund (IMF)? Well, let’s just say I will believe what I want to believe from what I read. Okay, reported in many media from an article in Reuters, IMF managing director, Christine Lagarde said that the rising interest rates in United States and economic slowdown in China were contributing to uncertainty and a higher risk of economic vulnerability worldwide. In brief, she said that the 2016 global economic growth would be “disappointing.” This was written in a guest article for German newspaper Handelsblatt. I do not think the article is in English. 🙂

Other reasons that the growth would be disappointing is the considerably slower world trade growth as well as the decline in raw material prices. The financial sector in many countries has weaknesses and risks are actually rising in emerging markets. Malaysia is definitely classified as an emerging economy currently. She added that other reasons include low productivity, ageing populations and the effects of the global financial crisis. All these are really pulling the growth down. I think she is giving a warning to the Federal Reserve of the US when she said that rising US interest rates and a stronger dollar may cause firms to default on their payments and this would ultimately affect the banks and states.

Everything seems to indicate that what we have been reading are all pointing to the same place; slowing 2016 and things may be getting worse. In fact, a recent report about the banks in Malaysia showed that the total profit numbers are on a downtrend while the provision for non-performing-loans were increasing. Of course, do not be mistaken. Profits are still healthy and continuing but it’s no longer on a rising trend. So, we should be wary that slow times are indeed visiting us in 2016. Well, when tough times come, the tough gets going. Are we one of the tough ones? Keep reading and adjusting our sail yeah. Happy New Year 2016.

written on 1 Jan 2016

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