The International Monetary Fund (IMF) President Lagarde said in an interview with the Nihon Keizai Shimbun recently that the trade war initiated by the United States is "the loss of (economic growth) opportunities." Lagarde believes that cutting-edge technologies such as artificial intelligence (AI) and robots are interconnected and the supply chain is strengthened. On this basis, she said that “reducing (trade) barriers is a wise move to increase economic growth.”

The IMF updated its forecast for world economic growth on October 9. Lagarde said, "Although the global economy will continue to grow steadily, the risks will increase compared with six months ago."

According to the report, Lagarde’s biggest concern is the trade war initiated by the Trump administration. If trade frictions expand the scale of sanctions, it will affect not only the countries concerned, but also the neighboring countries that have established the same supply chain. She also worried that the negative impact of consumer-centricity in the United States will expand.

Another risk is that funds flow out of emerging market countries. Some developed countries such as the United States have promoted interest rate hikes, and funds that have flooded into emerging market countries have re-flowed to developed countries. Lagarde said that he can only steer the world economy and "can only face the wind and break the waves and move forward." She also pointed out that “it must be affordable in the event of a crisis at the monetary and financial levels”. This is expected to be the topic of the G20 finance ministers and central bank governors meeting in Indonesia on October 11.

Lagarde recently visited Japan. Her purpose in visiting Japan is to review the Japanese economy. This is called the "fourth article consultation." She exchanged views with Japanese Prime Minister Shinzo Abe, Finance Minister Taro Aso, and Governor of the Bank, Kuroda, and issued a statement on October 4.

The IMF supports Japan's upward adjustment of the consumption tax rate in October 2019. Lagarde said at a press conference that "(upper tax rate) should be combined with prudent policy risk mitigation measures." The IMF is worried that tax increases will lower personal consumption in Japan. In the statement on the 4th, Lagarde said that "it is expected that (up to the tax rate) will have a negative impact on the overall economic growth in 2020." In particular, she is worried about the impact on the automotive and residential sectors, and she expects the Japanese government to introduce measures to mitigate policy risks.

Regarding Japan's long-term fiscal refinement, Lagarde pointed out in his statement that "(Japan) lacks a long-term plan," and proposed that the consumption tax rate should be raised to 15% in stages. When raising taxes, “single tax rate should be maintained”, and we are cautious about introducing a tax reduction rate system in Japan.

The IMF is increasingly wary of the side effects of the Bank of Japan's monetary easing policy. Lagarde said that "low interest rates will squeeze the income of financial institutions and encourage financial institutions (through investment and financing) to make profits." She expressed support for the Bank of Japan's amendment of monetary policy in July. However, for the Bank of Japan's forward guidance to continue to maintain low interest rates, the statement proposed that "the relationship with the price target should be clearly defined." In addition, Lagarde also proposed that Bank of Japan employees strengthen their dialogue with the market by issuing economic expectations.