Global economy in 'epic scale' change, says IMF's Lagarde

The global economy is experiencing "Transitions on an epic scale", the International Monetary Fund managing director said on Thursday, warning that turbulence in emerging markets could knock 0.5 to 1 percentage point off their growth. Christine Lagarde's remarks show the damage done to emerging markets by a recent round of "Taper talk", over the possibility of the US Federal Reserve slowing the pace of its asset purchases and their vulnerability to future changes in the pattern of global capital flows. "Because the normalisation of monetary policy affects so many markets and people across the globe, the US has a special responsibility: to implement it in an orderly way, linking it to the pace of recovery and employment; to communicate clearly; and to conduct a dialogue with others," said Ms Lagarde. The expectation of "Tapering" by the Fed had prompted a flight of capital from emerging markets, causing currencies and asset markets to fall, only for a sharp flow back the other way when the US central bank unexpectedly kept its purchases at $85bn a month in September.

Source: http://www.ft.com/cms/s/0/10477840-2c34-11e3-acf4-00144feab7de.html?ftcamp=published_links%252Frss%252Fglobal-economy%252Ffeed%252F%252Fproduct