The global economy is in “a delicate moment,” said IMF’s managing director Christine Lagarde.
“The growth is losing the momentum that we had hoped for pretty much across the globe. We have 70 percent of the economy that is slowing down,” Lagarde said Tuesday in an interview with CNBC’s Sara Eisen at the 13th Annual Capital Markets Summit in Washington, DC. “The U.S. is not immune to the deceleration anymore.”
Lagarde noted there are clear downside risks including Brexit and China trade tensions that have affected business confidence.
The markets have been sensitive to global economic data. Stocks posted a strong rally on Monday on strong manufacturing data out of the U.S. and China after taking a hit from weak retail sales and durable goods numbers in March. Adding to the market volatility has been the news coming from the negotiations of a trade deal between China and the U.S.
“I’m still optimistic [about a trade deal] and there are clear impetus for both sides to move forward. It’s vitally important,” Lagarde said.
She added based on IMF research, if a 25 percent tariff increase was imposed, it would lead to 0.6 percent loss on U.S. economic growth and 1.5 percent loss on the Chinese economy.
“Given that those are the two big giants currently, if you have that kind of negative impact on both, it would weigh heavily on the global economy and it would be bad,” Lagarde said.