World economy – a delicate moment

12 April 2019

Gita Gopinath, the IMF’s (International Monetary Fund) chief economist, describes the global economy as being at a delicate moment.

Writing in the IMF blog, she predicts continuing growth in the global economy, predicting 3.3% growth in 2019 and 3.5% in 2020.

So, why does she call this a ‘delicate moment’?

In her blog she mentions the central banks’ positive contribution to growth, whilst avoiding inflation, but she warns that future decisions could create different conditions for industrial growth.

‘These policy responses have helped reverse the tightening of financial conditions to varying degrees across countries. Emerging markets have experienced some resumption in portfolio flows, a decline in sovereign borrowing costs, and a strengthening of their currencies relative to the US dollar. While the improvement in financial markets has been rapid, those in the real economy have been slow to materialize. Measures of industrial production and investment remain weak for now in many advanced and emerging market economies, and global trade has yet to recover.’

Noting that financial markets continue to grow at the same time as industrial output slows, she warns against more protectionist policies and the risks to the eurozone of continuing Brexit uncertainty. ‘A deterioration in market sentiment could rapidly tighten financing conditions in an environment of large private and public sector debt in many countries’ warns Ms Gopinath.

In conclusion, Ms Gopinath warns that future growth could be ‘derailed’ if possible risks materialize. She points out that ‘stressed, export-dependent and heavily indebted’ economies would be particularly at risk. In her analysis, policy makers will need to be alert to offer policy responses to emerging situations.



How does the report view the actions of central banks?

Which sectors of the economy are most at risk according to the report?

What are the risks for your economy in 2019 / 2020?



Find words in the text to match these definitions. Highlight below for solutions

delicate – fragile, not strong

to predict – to say what will happen in the future

a contribution – the input of a group or person to a project

to avoid – to make something not happen

policy response – changes made by governments or management to create different circumstances

varying degrees – different amounts (of impact)

emerging – developing

resumption – starting again

sovereign – national, country-related

to materialize – to become real

to recover – to become strong again

to note – to notice, comment upon

debt – money owed

to derail – to stop an action or forward movement

indebted – owing a lot




Which verb form is in italics in the sentence below? Highlight below for solutions

Writing in the IMF blog, she predicts continuing growth in the global economy, predicting 3.3% growth in 2019 and 3.5% in 2020.

These are present participles and they are used in this sentence to introduce participle clauses.

Participle clauses introduce extra information about the main clause. In this case they tell the reader where the information is recorded and what the writer has said.