Sharp drop in commodity prices is posing problems for resource-based economies: IMF

Lagarde says prospects of rate hike in US, China slowdown are contributing to market volatility

IMF chief Christine Lagarde has said that global growth will likely be weaker this year with only a modest acceleration expected in 2016 but India remains a bright spot.

"India remains a bright spot. China is slowing down as it rebalances away from export-led growth. Countries such as Russia and Brazil are facing serious economic difficulties. Growth in Latin American countries, in general, continues to slow sharply," Lagarde said.

"We are also seeing weaker activity in low-income countries, which will be increasingly affected by the worsening external environment. At the global level, there is still a drag on the economy because financial stability is not yet assured," said she in her address Wednesday.

She noted that despite progress in recent years, financial sector weaknesses remain in many countries, and financial risks are now elevated in emerging markets.

Referring to the release of World Economic Outlook numbers next week, she said global growth will likely be weaker this year with only a modest acceleration expected in 2016.

"The good news is that we are seeing a modest pickup in advanced economies. The moderate recovery is strengthening in the euro area; Japan is returning to positive growth; and activity remains robust in the US and the UK as well," she said.

Lagarde said the prospect of rising interest rates in the US and China's slowdown are contributing to uncertainty and higher market volatility.

"There has been a sharp deceleration in the growth of global trade. And the rapid drop in commodity prices is posing problems for resource-based economies," she said.