The IMF published its World Economic Outlook on Tuesday, revising its global forecast to 3.4 percent in 2016 and 3.6 percent in 2017. “But I have to emphasize the risk is on the downside,” said Min.
Growth in emerging markets is projected to be more gradual than previously thought, while monetary easing in Europe and Japan is expected to proceed broadly.
Key risks in the IMF’s outlook relate to a slowdown in China. One of Min’s main roles at the IMF is advising central banks on policy. In China, he’s suggesting more transparency to steady markets.
“We encourage Chinese authorities to [provide] more communication, provide clarity,” Min said. “It’s very important for China to manage a very difficult system and also to understand the process to reduce volatility.”
He warned of shrinking liquidity, pointing to the U.S.Federal Reserve’s balance sheet.
“Every year the Fed’s balance sheet is expanding to 2 to 3 percent of GDP … is a big liquidity soak from the market,” Min said. “Central banks need to understand this because of interconnectivity.”
Min also highlighted the impact of a strong dollar, and potentially perilous connections between global markets.