IMF to downgrade global growth forecasts again, says Lagarde

The International Monetary Fund (IMF) is likely to downgrade global growth forecasts for 2016 again due to waning demand and investment, and rising inequality.

IMF chief Christine Lagarde said although Brexit has not brought the armageddon that was predicted during the EU referendum campaign as confidence indexes have recently reported high consumer confidence and retail sales, global growth prospects have not lived up to their potential.

Lagarde told Reuters: "You could argue that Brexit is not really delivering the massive crisis that we had expected, you could argue that the Chinese transition is proceeding reasonably well, and you could argue that low commodity prices have gone up a little bit. So this is on the surface.

"However, when you look deep down at the economic growth prospects, at the growth potential, at the productivity, we are not getting very good signals, and we will probably be revising down our forecast for growth in 2016.”

The IMF in July revised down global growth GDP by a about a tenth to 3.1 in 2016 and 3.4 in 2017, just after the UK voted to leave the EU in June.

The revision would be the sixth in 18 months and the IMF is due to revise forecasts in October.

After the referendum the value of the pound plummeted and Lagarde said Britons’ wealth had already fallen by 15% due to the weak value of sterling. Although recent consumer confidence surveys said UK shoppers’ morale had bounced back since the Brexit vote, business confidence has waned and data was weak.

Lagarde maintained that the full economic consequences of Brexit will not be known until 2017 as the there is uncertainty about what the UK’s relationship with the trading block will look like and the nation has not actually left the EU.