The uneven pace of growth in a “three-speed” global economy is creating new financial imbalances that could sow the seeds of a future crisis, IMF managing director Christine Lagarde has warned.
Ms Lagarde’s remarks yesterday highlighted the dominant trend in the global economy in which emerging economies expand rapidly even as advanced countries use ever more aggressive monetary policy to kick-start growth.
The IMF chief warned the global economy faced a series of “old” and “new” risks including a build-up of debt and foreign currency exposure in emerging markets as they take advantage of low interest rates to borrow abroad, as well as unsustainable public finances in the US and Japan.