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- IMF chief Lagarde: Likely to lower growth outlook for Germany
IMF chief Lagarde: Likely to lower growth outlook for Germany
The IMF already cut global growth forecasts in January with German growth seen at just 1.3% this year following the revision. And now Lagarde, mentions to Die Zeit that they are "likely" to lower the German growth outlook further.
Lagarde also called on the federal government to counteract higher government spending in the event of a downturn. "The German government could do some meaningful things with more money, for example, invest in the modernization of public infrastructure or expand childcare, which would be projects that strengthen the growth forces and Germany should tackle," said Lagarde.
Lagarde said the central banks have less leeway than before to react to a downturn. "Central banks typically lower interest rates by five percentage points to shore up the economy in the event of a looming recession, but that's not the case if the interest rate is one, two, or, as in the case of the euro zone, zero. That means governments have to do more," said Lagarde.
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